How to Offer Free Shipping When You Can’t Afford It
As we head into the holiday season, retailers are constantly looking for ways to stay competitive with the likes of Amazon.com and other big businesses that can afford to offer customer-enchanting incentives like door-buster deals and free shipping. However, these efforts can be costly and painfully confusing to implement. While the big players have automated systems and extra cash to spend on offering special services, smaller retailers have to get clever about how they differentiate themselves.
One area that's a huge concern for both businesses and consumers alike is fulfillment and shipping. A Forrester study found customers will avoid paying for shipping at all costs, even if it means buying elsewhere. Stitch Labs, an inventory and multichannel selling solution, also found in 2014 that when retailers offered free shipping, they were able to increase revenue by at least 10 percent. However, the same data showed despite the increase in revenue, businesses were still three times less likely to offer free shipping than larger retailers. If retailers can find ways to make free shipping easier, cheaper and simpler for customers (and their employees), they may have a chance to win this season.
If you’re not ready to commit to a full “free shipping” model, here are the most strategic ways to test free shipping on a small scale:
1. Provide free shipping in exchange for contact information. If offering free shipping to all customers doesn’t make sense for your business, follow Amazon’s lead with its Prime membership strategy. Not everyone can ask their dedicated customers to spend $99 a year to access great benefits like free shipping, but you can start with asking for something less costly for shoppers — their email address. By gating incentives and asking for an email address in return, you’ll increase lead opportunities and have the ability to continue engagement with prospects. Create a pop-up shop that allows someone browsing your website to include their email address to redeem free shipping. Populate a special code they have to enter in order to get free shipping, but don’t stop there. Continue emailing them with new product information, discounts and other marketing efforts.
2. Use free shipping to speed up the buying process. Another Forrester study found that 44 percent of online shoppers abandon their cart before checking out due to higher-than-expected shipping costs. If you see visitors leaving items in their shopping cart, then offer them a free shipping code as motivation to click “buy.”
If you use Shopify to monitor your sales, consider taking advantage of its Abandoned Checkout Recovery feature. This allows you to send automated recovery emails with a link to get people back to your site so they follow through with their purchase. Once you find who is leaving items behind, add those people to a list in your email database and send them an offer code for free shipping.
3. Make free shipping available to first-time customers only. A customer’s first impression of your brand is everything. Use this first impression to really wow them! To build a strong relationship with new customers and assure repeat buying, offer them free shipping. Something as small as, “First purchase? Shipping is on us” can have a huge impact.
4. Encourage brand supporters to share purchases on social media in exchange for free shipping. Have loyal customers share some of their favorite products in exchange for a discount code for free shipping on their next order. Making it a discount code that expires entices them to take action for something they know will only be around for a limited time. Keep track of mentions of your brand on social media to see if sharing causes any spikes in discussion of your products.
Once a new user “likes” or follows your company page and shares some of your content within their own network, you gain a lot of exposure to groups of people you may not have otherwise reached. And when a friend is making a recommendation, it’s instantly more credible than a sponsored post. This kind of promotion is “free” in a sense and extremely valuable. Show them just how valuable by offering free shipping for a limited time, such as a week or two, or even a month.
5. Give them a timeline. A sense of urgency may be just the ticket to get people to buy. Offer free shipping during major shopping holidays to see if people tend to respond to a ticking clock. Promote this via email or social media, highlighting the deadline prominently. Be sure to track your success and continue iterating on the timeline. Is a week enough time? Days? Maybe even test a four-hour sale. See what works for your audience and continue iterating.
Whether it's free shipping, exclusive access to products or suggested products providing a more unique experience for your customer, there are many ways a retailer can test free shipping, especially during the holidays. Using free shipping, even if based on a threshold such as “orders over $100 ship free,” can be a great tactic to see what works best for your customers. Be aware of the commerce and big retailer trends, then think of creative ways they can be scaled for your business.
Brandon Levey is the CEO of Stitch Labs, an inventory management solutions provider.
