The holidays are the most profitable time of year for e-commerce business owners. For a successful holiday season, it is necessary to differentiate your business from your competitors. One way to draw in customers, and gain a competitive edge, is through offering free shipping. According to the Walker Sands 2017 Future of Retail survey, free shipping is the number one incentive for consumers to shop online.
As a small, e-commerce business, the question is how do you offer free shipping without sacrificing profits and efficiency? The answer lies in the right combination of ensuring you aren’t overextending your budget and creating enticing offers. Use this list of tips to give you some ideas on how to offer free shipping as a small business.
How to Make Free Shipping Budget-Friendly
Offering free shipping throughout the holidays can be difficult for small businesses. It is great because it reels customers in for sales, but how can you afford to pay for it? Here are some different methods for you to try out:
- Hide the Shipping Cost in Price: Factor in the cost, or at least some of the cost, of shipping in the price of the item. That way you can still offer free shipping and make a profit.
- Set a Minimum Amount: Many of the big box stores enforce minimum order values. Follow suit and set a minimum order amount to qualify for free shipping. This will ensure you are not losing profits when offering free shipping.
- Bundle Products: Shipping more than one product will lower the cost of shipping. Bundle products that complement one another or can be used together such as a holiday gift basket.
- Event-Based: Offer free shipping on specific days or hours. Use this as a flash sale, where you randomly announce the free shipping offer, or as a scheduled promotion, where you market and create excitement for the offer.
- Members Only: Have a loyalty or rewards program? Offer free shipping for those customers, specifically.
- Email Sign Up: Do you have a newsletter or email list? Run a promotion for new subscribers. Once they sign up with their email address, they get free shipping on their first order.
- Bestsellers: Look at your inventory and determine your highest-performing products. Take the top three with your best profit margins. Offer free shipping on any order that includes a purchase of one of these bestselling items.
- Certain Locations: Offer free shipping to certain locations or areas. Choose areas that makes sense, logistically, to ship products for free without your business losing money.
How to Best Market Your Free Shipping Offer
Now that you have some ideas as to how you can make free shipping feasible for your business, it's time to look at how to promote your offers. After all, if nobody knows about your promotion, it's ultimately not going to be effective. Before we get into marketing strategy, we need to figure out how your free shipping offer will be redeemed.
In most cases, retailers are going to distribute promo codes that the shopper will redeem at cart or checkout. Most cart platforms provide an easy interface for creating promo codes with specific parameters for custom promotions. Promo codes are easy to distribute and it's easy to monitor how effective your promotion has been.
Three Promotional Marketing Tactics for Free Shipping
Engage New Shoppers with a Promotional Popup
80% of consumers stated that free shipping would make them more likely to purchase. Given this information, it makes sense to present your free shipping offer to new shoppers. Using a promotional pop-up is the easiest and most effective way to promote your offer to all new shoppers. If your free shipping offer requires a promo code, you can easily distribute promo codes directly from your pop-up.
To make it easier for your shoppers, you can add a "click-to-copy" feature which will copy the promo code to the shopper's clipboard when clicked. Want to take it a step further? You can auto-populate the promo code in the cart and checkout pages with a bit of coding!
Free Shipping Threshold Promotions
As discussed earlier, you can make free shipping work for your business setting up restrictions. Setting a minimum order amount for free shipping, also known as a free shipping threshold, is the perfect way to insure that free shipping doesn't destroy your margins.
These thresholds can also increase order size. A study by Harris Interactive and UPS found that 39% of customers would purchase enough to get free shipping. This tells us that consumers want free shipping so much that they are willing to buy more just to get the incentive.
Now, onto how to market your offer effectively so you can capitalize on this shopper behavior. Typically, we see banners at the top of the site that state "Free Shipping on orders of $XX or more." This is fine, but we can do better.
In this video tutorial below, you'll learn how to setup a free shipping threshold promotion that updates to tell the shopper how much they have left until free shipping. The video also shows how to engage a shopper with a promotion once they reach the given threshold. If you're on the Shopify platform, the tutorial can be found here.
Cart Abandonment Free Shipping Offer
When it comes to the holidays, shoppers are looking for the best deal possible. This exposes retailers to a massive increase in cart abandonment rates. Since we know that the top reasons for cart abandonment generally have to do with price and shipping costs, we can meet our shopper needs by offering free shipping to abandoning shoppers on the cart and checkout pages. This tactic can make a huge impact on sales conversion which is so important during Q4.
Note: If you plan on setting up free shipping offers with limitations, you will have to customize your promo codes or your checkout process within your cart platform to accurately apply discounts.
This is the same with your popups and promotions. You can implement display rules based on time, date, cart value, past order history, product specifics, geo-location, and much more. This gives you everything you need to align your promotional campaigns with the promotions you've lined up in the backend of your site.
How to Handle the Influx of Orders During the Holidays
Now that you have perfected how to offer free shipping to your customer, how will you ensure the order will make it to its destination on time? Many factors, including sales channels not being synced, improperly managed inventory, overselling, and fulfillment mistakes can be detrimental to a business. Prepare for the influx of sales by doing the following:
- Forecast sales: Planning ahead through forecasting is an important step to ensuring you have the proper amount of inventory for the holidays. Start by looking at industry trends and data, your company’s sales history, and your customer’s purchasing habits to anticipate
- Calculate Safety Stock: Calculate the minimum safety stock (items sold per day x days it takes for new inventory to arrive) for your bestselling inventory, so you always have a buffer on hand.
- Automate: Take the hassle out of managing your inventory this holiday season through automation. By using an inventory management software or shipping automation system, you can have more time to focus on other, important operations of your business.
Free shipping is an enticing offer for customers and has proven results for businesses. This holiday season use one of these ideas for offering free shipping and watch the sales roll in.