How To Make “Free Shipping” Profitable
Whatever your shipping policy is. Transparency is the key. Offering free shipping to your buyers will improve your sale. Guaranteed! But, it can also kill your profit margin if you’re not careful.
So, how do you make free shipping profitable? Here are a list of steps that any store owner can use to maximize profits on a free shipping offer.
Free Shipping on Everything:
Some merchants offer free shipping on all orders, regardless of the items included or the order value. This generally more viable for smaller lighter weight products, in the long run you could easily do a drop off yourself or send through it through courier as it is unlikely to be pricey.
Free Shipping on Certain Items:
It is common for merchants to offer free shipping only on certain items. For example those with greater margins, this makes absorbing the shipping costs seem less cumbersome.
Free Shipping with Minimum Thresholds:
Compared to free shipping on everything, this is a much more realistic tactic for merchants. Setting a minimum threshold is a way to encourage larger orders and reduce risk. For example you can a set a threshold of 5000naira, that is any customer who shops 5000naira and above qualifies for free shipping.
Free Shipping at Certain times of the Year:
You may choose to offer free shipping periodically, rather than all year round, also you could offer free shipping during holidays when competition is more aggressive, it is always good to test offers on days like Valentine’s Day and Mother’s Day.
Free Shipping to Certain Locations:
Many merchants offer free shipping to buyers within their home or store vicinity, this way it takes you practically nothing to hand deliver the item(s).
Some merchants provide extra incentive to encourage repeat purchases, such as offering free shipping to their most loyal customers. This can be a great way to experience longer-term benefits of free shipping by increasing the lifetime value of your customers.
Bake Shipping Fees into Product Price:
Okay, so this isn’t really free shipping, but it is a very profitable and common tactic Merchants use. Many sellers will add the cost of shipping into the product price so that they can promote the “free shipping” offer.
Free Shipping on Returns:
Returns is very common and expected for many items especially if you’re an apparel or footwear retailer, and if you have a high rate of returns, offering free shipping on those items should be considered.
Testing different offers is key to finding the most profitable free shipping strategy for your business. It is also important to first look at areas where expenses can be cut. For example, if you currently handle fulfillment in house, you may try to get a better negotiated rate from shipping carriers.