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How to Offer Free Shipping without Losing Profit Margins

I lately discussed the reasons to offer free shipping. Free shipping where it attracts more customers and increases the sales volumes, also brings some new costs.

It’s simple to understand, when customer is not paying the shipping cost, you are supposed to pay it.

So, should you consider not offering free shipping?

Well, that’s not a good idea too! Staying balanced works better than hitting an extreme. So, you don’t necessarily have to offer free shipping on everything in order to increase sales or become more competitive.

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how to offer free shipping

In order to find out the best shipping offers for your business, let’s discuss few important considerations first:

  • Profit Margins; It’s obvious that profit margins vary by product. Offering free shipping on the higher margins or else a flat discount may work considering this factor.
  • Products; It’s not just the profit margin to be sole deciding factor, but also consider that the size and weight of your products will decide the shipping costs. Larger and heavier items are expensive to ship. This is the reason retailers have free shipping restrictions.
  • Existing Orders; the most common goal sellers set with the free shipping option is to increase average order value. So look into your existing orders for average value, i.e. if average order value is $50, you test free shipping on orders above $60.
  • Location; Remember that shipping cost doesn’t just depend on the size and weight, but also the distance, so look carefully into your market, i.e. where your customers are located.

How to Select the Best Shipping Offer for Your Business:

It’s not just free shipping that works, but shipping discounts in any form can work great. So, not necessarily to stick to free shipping for the sake of industry standard. Devising a proper shipping plan according to the considerations you checked above is the best way to offer the right shipping option. Here are some of the best ways to offer free shipping and shipping discounts:

  1. If you are a retailer selling smaller, lighter weight products, offering free shipping on everything can work great. However, setting up a minimum threshold rather than free shipping on everything is a much more common and realistic tactic for retailers. By setting minimum order value thresholds, you encourage larger orders and reduce risk.
  2. Free shipping on certain items is also one of the most common practices. This is normally done for the products where margin is greater, and the shipping cost can be absorbed easily.
  3. Free Shipping during certain season or as a promotion can also work during holidays and other occasions.
  4. Free Shipping to certain locations is also a wise idea to attract a specific target market. If you are a small business with limited area to target, this can work great.
  5. Free shipping under loyalty program also work great, however, you need to design a tempting loyalty program which aims to enhance the repeat purchases.
  6. Baking shipping fees into product price is also workable, but only if you are selling your own brand.
  7. Free shipping on returns is very much appealing for buyers as it reduces the risk to zero for them. But you may chose this only and only if you have lowest return rate.
  8. Flat-Rate shipping is most common option when you are shipping internationally. However, while selling local with this option, you must adjust rates in a way that the larger the order is the lower the rate goes.

So, you have lot of options, but it’s not necessary to pick one and stick to it; testing different offers is key to finding the most profitable free shipping strategy for your business, so try one and then other and so on!

Whatever the option you chose, look what cuts more of the expenses, and you will find the right option!

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