In today’s online marketplace, customers both want and expect you to offer free shipping on your products. If you’re not doing it, then you’re losing customers. But how do you offer free shipping on local business delivery without wiping out your profit margins?
Add the Cost of Shipping into Your Product Price
Many retailers add the cost of the shipping to the price of their products. They then offer free shipping to attract customers.
This can work for a number of reasons. Firstly, if you’re not competing on price alone, the free shipping can be more attractive for customers. It’s also part of consumer psychology that people would rather pay a little more for a product that has free shipping than one that doesn’t.
Create a Minimum Order Threshold
Set a price at which customers can take advantage of free shipping. Don’t set it too high and use clever pricing and offers in order to get customers to reach the order amount.
Offer Free Shipping on Specific Items
It might not be possible for you to ship certain items for free. For example, extremely low-cost items or those that incur specialist shipping fees. Instead, create a list of products that free shipping can be ordered. Choose those where free shipping won’t eat into your profit margins too much.
The goal of incentives is to get repeat customers. This could be done in a number of ways such as offering free shipping on their next purchase, or you could charge shipping for an initial purchase, but offer free shipping on repeat purchases or consumables. For example, you could sell a printer that has a shipping cost, but any future purchases of ink cartridges and paper would be offered for free.
Provide a Tiered Delivery System
Shipping costs will vary depending on the speed at which it is delivered. The slower the delivery, the cheaper the shipping costs. Offer this economy service free on all of your products, and have a tiered pricing system for quicker shipping options. Most people want their deliveries quickly, so will pay.
This system is more likely to work if you’re selling products that people want to arrive at quickly and that have a good profit margin on them. If your business is working on low pieces but high volume, this might not work for you.
Annual Shipping Charge
You may have noticed some online retailers offering an annual delivery fee. This is usually one of the costs that are equal to the average number of deliveries customers make per year.
If this is calculated right, it can be a great way to offer paid-for shipping but making customers believe they are getting good value. For example, let’s say that your average customer makes 3 purchases per year. Set your annual shipping fee at 4 or 5 times your normal shipping costs. This will offer them unlimited free delivery of products for a year. It seems like a great deal to the consumer and will encourage some people to order more often. Some customers will order more times than this, some less. But it should work out well for you when you average out the numbers.
In order to keep up with customer expectations, businesses need to get up to speed with delivery options. By being smart about your delivery policies, marketing and with a great delivery partner on your side, you can do it without having to break the bank.