Shipping price sticker shock has given new meaning to the phrase ‘abandon ship!’ There are two ways to avoid this: first, if you’re charging for it, make sure customers know up front. Being surprised by high shipping charges is the #1 reason that customers go through the online shopping process and then jump ship before they complete their purchase.
Second – offer free shipping. Why? How?
Shipping costs money. Someone has to pay for it. Have shoppers gotten greedy or have they just been trained to see shipping as a last-minute price increase before clicking that all-committing ‘submit’ button? For whatever the reason (probably the latter), according to inc.com: “Offering free shipping is a necessity, not a perk, for retail sites.”
An Accent study has found that 88% of consumers are more likely to shop on free shipping sites. A similar study done by Lab42 reports a higher percentage (96%). It also reports that 87% of customers prefer websites that provide free return shipping. ComScore has determined that 58% of online shoppers have bought more merchandise to meet a minimum requirement for free shipping. Based on Walker Sands’ 2016 retail study, 90% of participants rate free shipping as their #1 incentive to shopping more online. For better or for worse, small businesses can no longer afford to ignore the big Amazon in the room. As Amazon goes, so too go customer expectations.
Mega-companies can more readily absorb the cost of free shipping. They’re buying product at discounted prices and selling (and shipping) in volume. Most can also offer options such as “buy online, pick up instore” (BOPIS) to many convenient locations. How can a small business keep up? Here are some ideas:
1. Have options: let the customer decide – pay (or pay more) for fast delivery, or, wait a week or so for free delivery.
2. Minimum purchase for free shipping: this can be a win for you and for customers.
3. Free-shipping on select items: higher profit margin items as well as high-priced, small items will cut into profits less.
4. Increase prices: this isn’t usually the best choice. It will work best in the case where your products are hard to find anywhere else, or for small businesses that are manufacturing in the USA. People looking to buy American are less likely to be deterred by reasonable shipping cost options.
5. Ship free during high-volume shopping seasons: this is also a great way to test a free-ship program.
6. Free-ship to new customers, to loyal customers, or to customers who sign up for your newsletter. You could even offer free shipping to customers who give you free press on social media, by way of a special coupon. Another win-win!
7. Offer free shipping to a convenient pickup location such as a UPS AccessPoint.
Flat-rate shipping and membership fees may also work well with certain product types and customer bases.
Also consider consulting with a logistics specialist. Finding you the best distribution solutions is their bread and butter. Warehousing and distribution on a small scale can cost big bucks, so outsourcing to an order fulfillment center can lessen the hit to your bottom line. Remember, these companies are negotiating bulk discounts with shipping companies and can pass them along to you.
And, if you are doing free shipping… make it known!
Additional resources: inc.com, comScore.com, practicalecommerce.com, quora.com, entrepreneur.com, mytotalretail.com, evansdist.com