The word “free” has an incredible impact on purchasing behavior. As a shopper, you know that receiving something for free can influence your decision to act. Offering free shipping is a great way to avoid unpleasant surprises at checkout. Many people believe that free shipping is the norm and that anything less is a disservice to your customers. It is especially important if you’re just getting started with a print on demand business that will ship products to customers.
WHY SHOULD YOU CONSIDER OFFERING FREE SHIPPING ON YOUR PRINT ON DEMAND BUSINESS?
With eCommerce steadily growing and retail stores gradually dying out, competition in the online shopping business is heating up. Free shipping is gradually becoming one of the potent weapons in the decisive battle for consumers waged by eCommerce companies. If given the option of free shipping, 90 percent of consumers would shop online more frequently, and 24 percent would spend more to qualify for free shipping. In addition, companies that offer free shipping have a 20% higher conversion rate than those that do not.
HOW TO COVER THE COST OF OFFERING FREE SHIPPING FOR YOUR PRINT ON DEMAND BUSINESS?
1. Increase the cost of the product.
When a customer purchases a single small, inexpensive item, free shipping makes no sense because the cost of shipping may be greater than the cost of the item itself. However, if your print on demand products are reasonably priced, you may choose to include the cost of shipping in the product price. Furthermore, this strategy creates the illusion of free shipping while increasing the product price to compensate for free shipping. To include the shipping charges in the listed product price, calculate the pricing using the average shipping cost per order.
2. Increase customer lifetime value (LTV).
With customer acquisition and shipping costs, recouping the money you’ve invested in making a sale. You’ll need a good retention strategy that includes subscriptions, loyalty programs, and smart email marketing to encourage a second or third purchase. This way, you can increase the lifetime value of your customers (LTV). Furthermore, some brands are willing to take a small loss on the first purchase because they know they will profit from the second purchase.
3. Boost the average order value (AOV).
If you can increase your average order value (AOV), you will increase your margin and offer free shipping. Offering upsells, memberships, and bundles is a great way to accomplish this. In addition, bundles are a simple strategy for offering a pre-selected combination of products you sell as a single unit (e.g., a gift set) at a discount or a mix-and-match option for customers to stock up and save. However, a bundle can make or break a deal. It has the potential to increase your AOV while decreasing your average fulfillment costs. As a result, when people get a good deal, they are more likely to spend more money.
HOW TO CALCULATE A FREE SHIPPING MINIMUM SPEND THRESHOLD?
Providing a minimum order requirement in return for free shipping can be an effective marketing strategy. To be cost-effective, the minimum amount spent to qualify for free shipping should be higher than a customer would normally spend. Incentives for larger cart sizes help your company offset logistics costs. Furthermore, customers may be unwilling to spend that much more money if you set the free shipping threshold too high.
While some customers adore your products and will gladly start stocking up on more to save a few dollars or avoid paying for shipping, it is important to keep in mind that others may be spending more to return some items. It’s no surprise that free shipping results in increased return rates. If you discover that this is occurring in your store and that you are ultimately losing money, you may need to tighten your eCommerce returns policy or change your free shipping strategy.
CONCLUSION
Offering free shipping is an excellent way to remove a common barrier to online shopping. However, if you haven’t thought about and calculated the best way to offer it, it can cost your company money. It would help to strike a balance between increasing conversions and maintaining your prices competitive while not losing money. It is also critical to maintaining open communication lines regarding shipping costs with your logistics partner. Having a top eCommerce fulfillment company partner, such as Fulfillplex, will allow you to easily scale, reduce, and offer free shipping to your customers. Get a quote from us right away.