In the eCommerce industry, there is one thing that nobody can deny: Customers love everything which is free. And in this article, we will discuss free shipping. By providing your customers with a desirable yet profitable perk, you set your eCommerce business on the road to establishing valuable customer relationships. For you, this means more profit in the long run. When you provide customers with a cause to make purchases with a greater average order value, operating costs go down. Nevertheless, the gross profit margin may increase based on your strategy, whether customers buy more products to reach the "free delivery" level or more expensive things.
So, in this blog post, we will show you literally everything about free shipping strategy: How it will benefit your store, what you need to consider before offering free shipping, how to do free shipping on Shopify, and so on. If you have already known the other thing, you can head straight to the A-Z steps guide on how to do free shipping on Shopify. If not, fasten your seat belt, and let's get started!
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- What Can Free Shipping Offer Benefit Your ECommerce Store?
- Things To Consider Before Offering Shopify Free Shipping
- How To Cover Free Shipping Rates
- How To Do Free Shipping on Shopify
What Can Free Shipping Offer Benefit Your Ecommerce Store?
First of all, why free shipping?
The reason is some Shopify stores need to offer free shipping to remain competitive. Free shipping has expenses, there is no doubt about that, but there are also some amazing reasons to offer it still:
- Boost sales: Customers will be more inclined to make multiple purchases on your website if you offer free shipping since they won't be concerned about how much it will cost to ship each item separately. The simplest solution is to provide free delivery to customers who spend a particular amount of money in your store. This is a catch and will encourage customers to make additional purchases from you. Of course, based on the amounts that will help your business keep shipping costs down, you can change your free shipping thresholds.
- Increase average order value: A common strategy used by Shopify merchants to raise their Average Order Value (AOV) is to set a free shipping threshold. Online merchants frequently require a minimum purchase to be eligible for free shipping. Customers are greatly encouraged to add more products to their (online) shopping carts by such a requirement, all in the name of gaining access to additional "free" discounts. In fact, 59% of poll respondents said they would be ready to add to their orders to get them up to the required amount to qualify for free shipping.
- Reduce cart abandonment: One of the most difficult problems in eCommerce is cart abandonment. Only a small percentage of the thousands of customers who add things to their shopping carts will actually make a purchase. Over two-thirds of website visitors, or 68.8% have abandoned their shopping carts on average in recent months. It’s all because new customers dislike surprises, and in this situation are “unexpected extra costs”. The biggest of all these "unexpected extra costs" is the price of shipping, which is why more than half of customers claim to have abandoned carts at the checkout. Your conversions will rise if you remove shipping from the list of items on your customers' order summary.
- Help to stay competitive: According to 66% of online customers in a survey, free shipping is still the most crucial consideration when choosing a merchant for the holidays. And as online consumers are becoming increasingly sensitive to paying for the delivery as free delivery becomes the new norm. In conclusion, opting to provide free delivery is not about obtaining a competitive edge but rather about keeping up with them.
- Improve customer loyalty: If you want customers to be loyal to you, you need to give them something in return. This is a give-and-take relationship. Giving free shipping discount codes to loyal customers can be seen as one of the ways to show gratitude to customers and they appreciate it. This will give them another reason to love your business and keep purchasing from your online store.
- Strengthen customer service: Because you offer clients a sense of ease, offering free delivery results in improved customer satisfaction rates for your business. Customers' experiences are enhanced when they feel confident in making purchases and don't have to worry about additional costs. Customers are more inclined to make a purchase when they are confident that shipping costs won't dramatically increase the cost of their transaction.
When should your Shopify store offer free shipping
Offering free shipping is already a great strategy itself, however, knowing when is the exact time to offer it may multiply the result extraordinarily. Here are some occasions we suggest that you can offer free shipping to make the best sales:
- Payday: Obviously, the time when your customers are more inclined to shop for the things they crave is when they're just getting paid. You can take advantage of this in a 'secret' way or you can also use it as a form of marketing. For example, a campaign like "Payday is here and we also have a small gift for you, feel free to cherish your efforts and reward yourself after a long month!" and offering free shipping to make them feel at ease when purchasing the long-waiting cart without worrying about shipping costs for each bill.
- Holidays and special events: Due to McKinsey, although customers are concerned about the economy, they are still excited about holiday shopping. But according to another survey, avoiding shipping fees and delays (32.7%) is one of the reasons why shoppers choose to shop in stores over online shopping during the Holiday season. This means that customers will buy more around the holidays (surely) and you already know the reasons why customers are afraid to buy online on these occasions, so why not take advantage of it guaranteeing that your Shopify store can fix the problem by offering free shipping with speed?
- When new visitors sign-up or provide their information: For new customers or visitors to your Shopify site, offer free shipping as a reward to incentivize them to make their first order and provide information for you to connect with them. For example, you can put ads with something like 'Join us and get free shipping on your first order with no conditions' to attract customers. This may not be as profitable as other forms of marketing, but in return, you will gain a new customer base and encourage them to try your product.
Things To Consider Before Offering Shopify Free Shipping
The main keyword of this part is definitely profit margin. It's crucial to consistently evaluate your selections to determine which generates the highest margins. You should come up with answers to the following questions:
- How much are carriers charging for the shipments? One of the important factors when offering a shipping discount is that you need to anticipate the amount that the business will incur, and here is the shipping cost. Calculating this amount will help you choose the right way to lower your costs and keep your profit margins increasing.
- How much are the transaction fees you will have to pay? You also need to take into account any additional costs you may have paid for your transactions. Duty costs and credit card fees are a couple of examples of them.
- How much profit are you willing to lose? With that said, free shipping will not be 'free' for your Shopify store because you are the one who bears the cost that the customer gets 'free'. However, what we mean here is not that you will lose money, just that you may make less profit during the free shipping tactic test and calculate shipping rates carefully. So how much your business can trade before getting a bigger profit is something you should take into account when offering free shipping.
- Delivery time: Brands were willing and able to bear this expense when e-commerce volumes were steady and customers were content with shipping windows of three to five business days. However, with e-commerce surging since the pandemic's start and customers expecting their delivery faster than ever, retailers are finding it harder and harder to continue offering free shipping.
How To Cover Free Shipping Rates
Free shipping may sound fantastic, but the word “free” here is unfortunately not for Shopify store owners. So, can businesses offer free shipping and still turn a profit? The answer is definitely “Yes” and this is how we are going to make it:
- Up-price products: You can integrate some of the shipping costs into product pricing to reduce cart abandonment. By applying this tactic, you give customers the impression of free shipping, while increasing the price. You would need to do some research to determine how much to increase the product price, and even though you won’t be able to cover the whole expense, you can rapidly make up for the difference the more orders you get.
- Count it as an operating cost: You must think of the shipping expenses as an expense for your company because you are bearing them for your customers. It must be taken into account in all calculations, and your financial records should reflect this. Having an affordable shipping solution is crucial. You don’t want to lose money for ignoring shipping rates, do you? Therefore, be sure to account for shipping expenses.
- Optimize packaging: Packaging is a crucial element that can affect the overall quality of the product as well as the shipping cost. The physical design and weight of the packaging can affect transportation, even a slight reduction in the packaging size could lead to amplified cost savings. This means more items could be bundled into one single shipment instead of several, and fewer vehicle and transit miles as a result. Packaging can vary for each product based on size, weight, etc., so consider learning all about them beforehand to optimize packaging. For example, you can choose lightweight packaging for clothing items, as opposed to delicate and fragile things, which require heavier packaging.
- Use third-party shipping service or fulfillment service: When deciding which delivery service to work with, don’t put all your eggs in one basket! Using multiple platforms helps reach multiple demographics that favor different platforms, and brings in more shipping discounts. One company might offer you a lower shipping rate in order to compete with other companies. For example, FedEx is suitable for cross-country shipping with overnight shipping, while DHL is suitable for international shipping. Ultimate Guide on Third-Party Logistics (3PL) E-Commerce Fulfillment Solutions to Scale Your Business. If your business is snowballing or you just don't want to deal with shipping orders, you can also consider using fulfillment services. Having multiple fulfillment centers allows you to serve different geographic locations more quickly, while you do need to pay more money, it’s going to bring you profit in the long run as well as reduce shipping costs. Shopify Fulfillment Network: Everything You Need To Know
- Distributed inventory: Distributed inventory is an effective and essential strategy. By spreading goods across multiple fulfillment centers instead of one centralized center, companies can significantly reduce shipping costs and time, allowing items to go through fewer shipping zones. especially with products that are larger and heavier (construction materials like bags of cement, pieces of wood, etc.) which take up a lot more truckload space.
- Offer flat shipping rates: Despite not being totally free, flat-rate shipping is a highly useful method for online retailers, where the cost of shipping is based on the size of the box or envelope, instead of the weight of the products, making the checkout process much simpler and more streamlined. This means that you can ship a lot of items for the same amount of money, as long as they fit in the shipping box and don't exceed the maximum weight allowed. Flat-rate shipping is advantageous during the holiday season. You can also set different shipping rates for deliveries to different countries or zones.
How To Do Free Shipping on Shopify
Providing free shipping for your eCommerce store on Shopify may seem a little confusing to a lot of people, especially beginners. But it’s actually very simple and can bring you lots of benefits once finished. Here is a six-simple-step guide to help you set up free shipping in your Shopify store:
- Log in to your Shopify admin dashboard.
- Click on Settings, then Shipping and Delivery.
- Next to the shipping profile, if you want to add a free shipping rate, select Manage Rates.
- Click Add Rate.
- Set the Price base to 0.
- Click Done and don’t forget to hit Save to confirm the offer.
Tip: You can also set up required conditions for customers to meet in order for free shipping to be applied, like minimum order value, shipping zone, price-based condition, or weight-based condition.
- After step 5, click Add conditions
- Click on Based on order price if you want to set a minimum price for orders
- Or click on Based on Weight to set a minimum weight
- Depending on the products, you can adjust the price field as a minimum and maximum value
And to make the process easier, shift through Shopify App Store. They have multiple apps that will help Shopify merchants enable free shipping and add free shipping offers with free shipping bar support creating free shipping codes, customer listings, shipping profiles, etc.
Small tips to further utilize free shipping for your online store:
- Limited offers: If you are not able to offer year-round free shipping, especially during your busiest period, you can use it as a promotional tool on a specific day like discount codes or free shipping discounts with usage limits to increase sales and cover the promotion’s expenses. This can be used at a slower time of year to sell off older items, or you can offer free shipping on payday to make sure consumers have enough resources to purchase from your online store. To help build smart rules-based exclusive offers automatically, you can refer to Discount Ninja app which can be used directly in Shopify Admin.
- Up-selling and cross-selling: Using free shipping as an encouragement when online shoppers make cross-selling or up-selling purchases, you can easily get them to buy more. When a customer is close to the free shipping threshold, this is the perfect moment to recommend an extra product or a more expensive one to help them exceed the qualifications, which also makes shipping less expensive for you. Furthermore, this drives up average order value and your profit margin. 7 Best Shopify Upsell Apps and Why You Should Use Them (FREE VS PAID)
- The reward for referring, referred customers and loyal ones: You would want the regulars to keep coming back, and it is even better if they recommend your eCommerce store to a friend, right? Rather than acquiring only one new customer, why not acquire everyone in their circle as well? You can provide free shipping as an incentive for both existing customers and new ones that they bring in. The existing customers can get a discount for raving about your brand, and their friends can enjoy a free shipping offer on their first purchase, which will give them a positive experience. Due to the features that you may need to apply this tip, we suggest you can use Smile: Loyalty & Rewards app which is also merged with Shopify Admin.
- For specific products or certain order values: It may not be very practical to offer free shipping on products with substantial weight, or a collection of inexpensive products, as it can significantly cut into your margin. Instead, consider only applying free shipping to specific items to boost sales. Do your research on the cost of shipping for each of your products to come up with an ideal shipping strategy and maximize profit. For how to do it on your Shopify store, you can go back to the step-by-step guide that we have already mentioned above.
- Membership program: By integrating free shipping into a membership plan, you can boost sales and bring in more money. Instead of offering free shipping to all purchases, you might decide to limit access to this service to only customers who are members. This is beneficial to both parties: the customers can be provided with exclusive perks and benefits, while the shipping cost can be compensated by the membership fees. If you keep this system in good shape, customers will be more likely to sign up for the membership plan again, which boosts customer loyalty. Using this strategy, Amazon has gained 78% of members joining Amazon Prime.
- Market Your Free Shipping Offer: Free stuff appeals to all consumers, especially free shipping. A customer is more likely to buy a slightly more expensive product if it’s accompanied by free shipping. Just offering it to consumers is insufficient, you need to highlight it on your page so that it is the first thing that they see when they visit your Shopify. You can also optimize email campaigns, sending customers emails to promote your free shipping offer. Having the right strategy to market free shipping is the way to help customers notice and take advantage of the offer, and in turn, boosts sales. Shopify Markets: The Secret Weapon To Bring Your Business To International Market
Offering Free Shipping on your Shopify store can give you an edge against competitors and is an easy way to boost interest. Furthermore, free shipping is an excellent method to establish a strong rapport with your customers, encouraging them to keep shopping at your Shopify store. It is essential to thoroughly plan and assess the best way to do free shipping for your online store, to encourage purchases without it coming at a cost to your own company.
Now that you have learned all the tips and tricks as well as how you can do Free Shipping on your own eCommerce store, what are you waiting for? Head to your website and start selling!