This online Holiday Shopping season is expected to break records and offers exciting challenges for eTailers to maximize order conversion and profits. Most businesses spend time and energy to drive traffic to their site, but what happens when customers get to the product page, do they add items to cart? What about when they get to checkout, how many of them complete the order?
According to a study by UPS, free shipping is the #1 concern for customers when it comes to checking out. But for smaller businesses without deep pockets like Amazon, how can you offer customers free shipping without breaking the bank?
Research tell us that 93% of people will take actions to qualify for free shipping
The most frequently taken action to qualify for free shipping is adding items to a cart to meet shipping requirements. Here are three actions you can take to increase sales and capitalize on this trend by incentivizing shipping minimums in several ways:
Increase your average order value
Determine your minimum purchasing threshold by calculating your current average order value and setting the free shipping minimum slightly above it. This will drive the customer to add at least one more item to the cart in order to qualify.
Just be careful not to set your threshold too high. If your average order value is $20 and you set your free shipping minimum at $200, you’re not offering enough savings to counteract the increased spend by the customer.
Offer free shipping as a promotion
You don’t have to offer free shipping all the time. Free shipping can provide a boost in sales at opportune times like the holidays or for clearing out old inventory. A limited time span drives urgency and acts as an incentive for customers to buy now.
Also don’t forget that you can just offer ground services for free shipping. According to research, 50% of shoppers will choose a slower transit time to qualify for free shipping and 83% of them are willing to wait an additional two or more days to get free shipping.
Diversify your carrier mix
While offering “free shipping” is easy to say on the product page, financially, it can be difficult to balance.
If you’re only relying on one carrier today, you may want to consider adding a few additional carriers before the holiday rush. Working with multiple carriers can help you optimize costs and provide more delivery options for customers.
You can offer free shipping for a minimum order amount using cheaper but slower ground services early in the holiday season, and increase the minimum order amount later in the holidays while using a carrier who can ensure delivery by Christmas at an additional cost.
For example, UPS will have one surcharge for packages sent to residential addresses between November 19th and December 2nd of 2017 and then a different set of surcharges from December 17th to December 23rd.
In contrast, FedEx announced that it will not apply residential holiday season surcharges, except in the case of packages that require additional handling or are oversized.
One additional thought. Don’t just offer free shipping because your competitors do! Make sure the economics work for you. Shipping can make a huge difference in your revenue stream and customer retention, so track results accordingly. Key metrics to track:
- Conversion rate: Are more visitors converting into buyers with more shipping options at checkout, or during a free shipping promotion?
- Average order value: What was the previous average order value? How much has the average order value increased since implementing a free shipping offer?
- Margin per order: How much is the cost of free shipping eating up? Are the extra sales making up for the cost of free shipping?
Utilize free shipping to your advantage and get creative. With Freestyle M.O.M. and Shippo seamlessly integrated, you can tap into discounted shipping rates and a diversified carrier selection directly from your inventory management system all for free. We’ve got your back for this holiday season!
This post comes to us from the shipping experts at Shippo, a Freestyle partner.
