2 Ways to Make Free Shipping Feasible for SMBs This Holiday Season

In peak season 2022, the top priority for many small to midsized businesses (SMBs) isn’t keeping up with dwindling inventories or navigating pandemic-impacted supply chains, it’s saving money. ShipStation data found that most merchants will cut costs this season by increasing delivery fees and decreasing delivery speeds for the end consumer. However, SMBs that take this route may lose more customers than dollars they gain back in revenue. According to ShipStation’s data, cost and speed of delivery are the two most important conversion factors for consumers.

Knowledge is power, and a misalignment around shipping expectations doesn’t have to mean missing revenue this holiday season. Here are two ways SMBs can make shipping a conversion tactic vs. an add-on hassle for consumers, as well as how they can accomplish this goal as swiftly as the enterprise retailers do.

Threshold Shipping

Purely free shipping is always the goal, but it’s not a feasible option for every merchant to offer, especially as many face timely challenges like high inventories and decreased consumer spend. These SMBs can adopt a “threshold shipping” strategy. This allows customers to unlock free shipping if they place an order above a certain dollar amount — generally, just above the average order total. This strategy holds up. ShipStation data found that 91 percent of shoppers will spend more to reach these free shipping thresholds. What’s more, SMBs can promote high-profit margin items, typically in the $20 range, on the final order page as a way for customers to fulfill the threshold. This allows merchants to increase profits, offer free shipping, and even reduce inventory surplus.

Calculate Shipping Costs Like the Pros

Every merchant has to go through the process of calculating shipping costs — it’s how they know what to charge for shipping in the first place. However, what many SMBs don’t know is that the most cost-effective way to ship doesn’t have to be the slowest way. From the parcel expert’s perspective, there's a key factor that determines the price at which merchants ship their products: weight. While a lot of focus is placed on delivery distance and zones, weight is critical in determining the price of a shipment.

Not only does every pound increase the shipping cost, but dimensional weight is taken into consideration as well. For example, if a merchant is shipping larger quantities of very light items in the same box, the amount of sheer space the box takes up will also be reflected in the final price. This is where strategic packaging comes into play. By simply picking the right type and size of parcel for an order, a merchant can save on both actual and dimensional weight costs. SMBs can also strategically separate and box items so they're paying the lowest shipping rate possible.

Creating a top-notch, cost-effective shipping experience for today’s consumer is no longer a business differentiator, it’s table stakes for success. And now, this expectation is held for all online merchants, not just big-box retailers. Amid this unprecedented holiday season, SMBs can leverage these two tactics to help make shipping a business driver vs. a simple cost carried to the customer.

Robert Gilbreath is the general manager of Auctane’s ShipStation, the trusted leader in shipping software that helps online sellers scale their businesses and deliver exceptional customer experiences.

Bryce Cazier is the director of marketing at UPS, and is responsible for the integration of UPS’ market-leading capabilities into the family of Auctane brands, including ShipStation.