How to Boost Your Sales with Free Shipping

Posted by Shu Wen Saturday 30 Nov 2019

Believe it or not, free shipping is everywhere. Whether you are shopping for apparel, accessories, home essentials, you will never miss out the free shipping strategy on their sites. So is free shipping a go-to option for sellers? Does it really work? How about the shipping cost, does that mean you will have to bear the cost yourself? Fret not, we will have your doubts answered below. Read on to find out how free shipping can help in boosting your sales!

1. Makes you more competitive, in other words stand out from the rest

According to the survey by Invesp, 9 out of 10 consumers remarked that free shipping is the number one incentive to shop online. But why? As we all have been an online consumer, we all somehow experience this ourselves. When sellers selling about the same products, you would scroll and search for the cheaper ones otherwise one that offers free shipping? So by having free shipping, it makes you more competitive, allowing you to be kept in view and ultimately into the cart.

2. Reduce barriers and provides a smooth checkout

Based on the same survey, 61% of the consumers are more likely to cancel their purchase if free shipping is not offered. Some of the consumers might have shown interest to your products but why aren't they converted in the end? The shipping cost might be one of the reason. It may be the total price exceeded the buyers budget that causes them to click cancel or the shipping cost does not match with their expectation. By providing free shipping, it would actually clears off the barriers and make the buyer's decision making smoother. Some buyers do know that sellers might mark up or added the shipping cost into the selling price, however they do not mind because to them that is the price projected to them at the first place and they have accepted it, they love it and they buy it!

3. "FREE" is the magic word

People just love the word "FREE". It is like a word that could cast a spell, getting the attention and causing a hype among everyone that makes everything looks so irresistible. Plus, humans fear of missing out. So by offering free shipping, it does trigger the emotional purchase.

4. Encourage buyers to buy more

On certain sites, you will notice they have a minimum purchase in order to enjoy free shipping, like "Free Shipping over $100". Interestingly, buyers would actually purchase more and add items into cart in order to qualify for the free shipping.

4. Stand a chance to be featured on Luulla's Free Shipping Page or on Front Page

For free shipping items, you will you be able to stand a chance to be featured under Luulla's Free Shipping page. This will help to narrow down buyer's searches. For those who look for free shipping, by clicking on the page. Voila, all the items are there to be viewed.

How to know if you should give free shipping?

We understand that you might be shipping internationally and the shipping might be slightly higher. So you would not make much profit if you actually absorb them all. Or maybe you are selling bigger size items like wedding dresses to prom dresses that would weigh something, then your shipping cost might be a sum too. Therefore, not all items works the same way and perceived by the buyer in a same manner too. So here are some of the ways you can test out to find out which free shipping strategy works best for your items.

1. Understand your customer buying behaviour

Start doing research on your market, what are the big guys doing, how they are doing. Look at how much they set their items in terms of their pricing. What are the hot selling items. How do they offer their free shipping.

2. Understand your pricing

Start calculating each of your products profit margin and the shipping cost for each item if your price for each varies or based on the product category. From the margin, you would be able to decide which items are more suitable for free shipping or how you would adjust your free shipping threshold.

3. Test it out

It is all about testing it out through trail and error to see which works best for you. Do not merely follow by giving free shipping for all just because everyone is doing it and that the buyers are attracted to it. Test and see which works best for you and yet perceived as value by the buyers which means more conversions! Do not worry check out some of the ways here that you start with before deciding your free shipping strategy!

Create your threshold or baseline

With this strategy you would need to find out what would be the best baseline of free shipping for your business that make buyers feeling motivated to add in more items into the cart in order to enjoy the free shipping. So for this, it gets a little tricky here because you do not want to set it too low, this would drive less profit for you and not too high for the buyers to achieve and ultimately drive them away. First, calculate your average order value and from there set the minimum threshold a little higher than it.

In order to grasp a little more detail on the profit you can expect. Follow the the following calculations:

Average order value = $20

Average Shipping cost per order = $5

Profit margin 25%= $5

Net profit = $20 - $5 - $5 = 0

For this, you would break even, earn no profit if you offer a free shipping of minimum $20. You see, this is what you do not want to foresee. So if you would like to earn a net profit of $10 per order, start trying your base with free shipping at $40.

Try not to get too over excited or ambitious by setting the threshold to $100 because your average order value is about $20. Hence, here is setting an achievable threshold and yet motivating to the buyers. Try out the threshold and compare the percentage of conversions you get to see the optimal level you should go for.

Free shipping to only selected category or items

If you sell a wide range of products, the size and profit varies. You may start off by giving free shipping to smaller and lighter items. For example, jewelry, phone cases, light-weight T-shirt and tops and stationery.

Or if you are trying to push a slow-moving item or a less popular colour, use this strategy of free shipping to stimulate buyers buying behaviour.

Free shipping based on locations

As Luulla sells internationally and has a wide base of buyers from all over the world, you can also provide free shipping based on locations in order to expand your customer base. If your shipping cost for certain items is too high and unable to cover the cost or you realized most of your customers are from the US and the potential can be much derived from there, you can restrict your free shipping based on locations.

If certain locations, the shipping cost is too high and difficult to play around, you may give your customers options, you can search for a cheaper shipping service and offer them free if they do not mind the long wait. You would be surprised some of the customers would not mind the wait provided the items you are offering are not that urgent most of the time. If your items are like wedding dresses or prom dresses, for this case, this would highly unlikely customers would wait for weeks.

Measure the impact of free shipping strategy imposed

Measure after every test to find out how well it works for your business and from there you would be able to decide on the best free shipping strategy for your business! Start trying if you have not provide free shipping for your customers or even if you are currently offering them, you may try certain strategies here if your current one does not impact your business much.

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