In today's competitive e-commerce landscape, free shipping has become more than just an added bonus – it's now an expectation among consumers. In a study by Statista, around 68.2% of consumers worldwide were more likely to complete their online purchases when offered free delivery. On-demand delivery services were also an effective way to push shopper conversions, with around 37% of consumers being more likely to purchase with a next-day delivery option available.
Businesses looking to get ahead of their competition should now consider not just the logistical practicalities of offering free shipping and delivery to consumers but also how this service can play a role in your company’s overall success.
The psychology behind "free" shipping and how it affects customer decisions
The word "free" holds immense power when it comes to consumer behaviour, be it free samples, free returns, or free delivery. The allure of zero-cost shipping, in particular, creates a perception of added value, increasing customer satisfaction and prompting customers to complete their purchases. By offering free shipping, businesses can tap into this psychological trigger and increase conversion rates.
Moreover, in a competitive market, businesses that are able to offer free shipping gain a significant competitive edge over those that don't. Customers looking to get the best possible value on their online spending are more likely to choose a seller that provides free delivery, even if it means paying slightly higher prices for products.
How free shipping can help your business stand out from the crowd
One of the most significant benefits of offering free shipping is its impact on cart abandonment. According to Baymard, 47% of users who intended to buy an item did not complete their purchase due to high shipping costs or other additional fees. This is especially salient for international shipments, which typically incur additional import tax duties or international shipping charges. By eliminating shipping fees at checkout, businesses can significantly reduce cart abandonment rates and increase sales.
Additionally, free shipping can help businesses build customer loyalty and trust. When customers know they won't be hit with unexpected shipping fees at checkout, they're more likely to return for future purchases. Consistent and transparent free shipping policies can even lead to repeat business and positive word-of-mouth amongst shoppers, further boosting sales and brand loyalty.
How to strategically implement free shipping to boost sales
1. Incorporate free shipping costs into product prices
Incorporating free shipping costs into product prices allows businesses to offer free shipping on all orders without directly impacting their profit margins. By factoring the cost of shipping directly into the price of the products, businesses can provide customers with the perception of receiving free shipping while maintaining their bottom line.
When implementing this idea, it's essential for businesses to conduct a thorough analysis of their shipping costs and pricing strategy in order to strike the right balance between covering shipping costs and remaining competitive in the market. Businesses should calculate the average shipping cost per order and then adjust product prices accordingly to cover these expenses.
At the same time, transparency is key to avoiding any confusion or backlash from consumers. While customers may be more willing to make a purchase if they perceive the shipping to be free, even at higher product prices, businesses should be upfront about factoring shipping costs into product prices to avoid any misunderstandings.
2. Introduce a minimum purchase threshold
Setting a minimum purchase threshold for free shipping is an effective strategy to encourage customers to add more items to their carts to qualify for the offer. By incentivising larger orders, businesses can increase their average order value and offset the cost of providing free shipping.
At the same time, businesses should carefully consider the optimal threshold that strikes a balance between encouraging additional spending and not deterring customers from making a purchase. They should analyse their average order value and consider historical customer purchasing behaviour to determine the most appropriate minimum purchase amount.
It's also essential to clearly communicate the minimum purchase threshold for free shipping to customers. Businesses can prominently display this information on their website, product pages, and at checkout to encourage customers to reach the threshold. Additionally, businesses should regularly review and adjust the minimum purchase threshold as needed based on changes in customer behaviour and market conditions.
3. Plan for time-bound promotional offers
Offering free shipping during specific periods is an effective way to create a sense of urgency and drive sales. By leveraging time-bound promotional offers, businesses can capitalise on seasonal trends and consumer behaviour to boost their revenue.
When planning time-bound promotional offers for free shipping, businesses should consider factors such as seasonality, peak shopping periods, and industry trends. They should align their promotions with key dates and events that are relevant to their target audience, such as major holidays, shopping festivals, or product launches. To maximise the impact of time-bound promotional offers further, conduct a compelling marketing campaign to generate excitement and anticipation among customers. This can include email marketing, social media promotions, and targeted advertising to reach potential buyers and drive traffic to their e-commerce website.
Businesses should also ensure that they have the logistical capabilities to fulfil the increased demand during promotional periods. This may involve scaling up their operations, optimising their supply chain, and partnering with reliable logistics providers to ensure timely delivery of orders.
4. Encourage engagement
Encouraging customer engagement through various actions in exchange for free shipping can be an effective way to build brand loyalty and drive sales. By incentivising interactions with the brand, businesses can increase customer engagement and cultivate a loyal customer base that continues to support the brand over time.
When implementing this strategy, businesses should consider the types of engagement they want to promote and the incentives they are willing to offer in return. For example, businesses may offer free shipping for customers who follow their social media accounts, sign up for email newsletters, or refer friends to the brand. Businesses should promote these offers across multiple channels and touchpoints, such as social media posts, website banners, email newsletters, and in-store signage, to reach a wider audience and encourage participation.
It's also essential for businesses to clearly communicate the terms and conditions of such engagement incentives to customers to avoid any confusion or misunderstanding. This includes specifying how customers can qualify for free shipping through engagement actions and any limitations or restrictions that may apply.
5. Build loyalty programmes
Implementing loyalty programmes that offer free shipping as a reward for repeat purchases can be a powerful way to incentivise long-term customer loyalty and increase sales. By providing additional value to loyal customers, businesses can encourage them to return to the store and make repeat purchases, ultimately driving revenue and profitability.
When developing a loyalty programme that includes free shipping benefits, businesses should consider factors such as programme structure, reward tiers, and redemption options. They should design the programme to be easy to understand and participate in, with clear incentives for customers to join and engage with the programme. Businesses should also regularly communicate the benefits of their loyalty programme to customers and encourage them to participate. This can include promoting the programme through email newsletters, social media posts, and on-site messaging to remind customers of the value they can receive by becoming a member.
Once the loyalty programme is in place, businesses should continue to track and analyse key metrics such as customer retention, average order value, and programme engagement. This can help them identify areas to optimise their programme in order to improve customer satisfaction.
