Online retailers have long deferred free shipping, considering the cost of “free” as anything but. As consumer demands grow and threshold wars rage on, free shipping is no longer optional but essential for business to thrive.
Shipping Wars Among Retail Giants
Last week, major retailers made waves with changes to their free shipping thresholds.
- Target raised its threshold from $25 to $35
- Amazon dropped its threshold for non-Prime members from $35 to $25
- Wal-Mart, too, dropped the threshold to $35 for two-day shipping this past January
This update comes two years after Target slashed its threshold from $50 to $25 in February 2015.
The megastore experienced a dip in sales last year leading up to an underwhelming holiday quarter. And while Target hasn’t shared specifics, it did disclose that “a small percentage of Target.com purchases are less than $35 so the majority of orders will continue to ship for free.” (CNBC)
So what does the future of shipping hold for your business?
Free Shipping: No Longer Optional in Ecommerce
“If you hear me say anything it’s this: Find a way to offer free shipping, or you’re gonna get pushed aside.” -Jon Reily, Vice President of Commerce Strategy at Razorfish
When futurist Jon Reily motioned for free shipping at MivaCon 2017, the room stirred. This option undoubtedly carries a cost for you, the retailer. But with so many raising the bar to meet consumer demands, the cost to opt out is even higher:
84% of customers are more likely to shop with brands that offer free shipping (AYTM)
- 28% of shoppers will abandon their shopping cart due to unexpected shipping costs (Kissmetrics)
- Free shipping led to a higher opinion of brands for 70% of shoppers (AYTM)
- Delivery cost is the second highest reason customers abandon their shopping carts (Rejoiner)
With a marketplace saturated with competitors vying to eat your lunch, the option to ship for free is worth its weight in gold.
Six Strategies to Make Free Shipping Profit Your Business
Competing with consumer expectations can feel like a game of catch-up, but shipping for free does not have to come at such a high cost. In fact, the most successful retailers are treating this perk as leverage.
Implementing the right strategy upfront will lead to greater conversion. In fact, free shipping is so important that 93% of online shoppers have gone extra lengths to qualify (WSJ).
The following are six strategies you can test to maximize profits from free shipping:
- Set a control rate for comparison: Test shipping for free for a week or two. See how this affects conversion rates.
- Increase the minimum order value: Ship for free with a specified threshold. Test the margin from there.
- Tie it to certain products: Test conversion rates for both total order value and by SKU with free shipping for specified products.
- Offer a promotion: In a recent study, 75% of consumers were more likely to shop with a free shipping promotion than any other type of discount.
- Include the option for slower delivery: Consumers are more likely to accept slower delivery than to pay to ship.
- Increase product prices: 19% of consumers say they’ll pay full price if retailers will ship for free.
What is your approach to shipping? Are you considering offering free shipping, or are you still hesitant?
Find out more about how to make shipping work for you with the resources below, then continue the conversation with us:
- Watch this webinar in partnership with ShipWorks on 5 Best Shipping Practices to Grow Revenue
- Discover the benefits and challenges of international shipping with this webinar from Miva
- Get ahead of heavy shipping periods with 4 helpful tips from Lauren Jow at Shipwire