The Right Way to Structure Free Shipping Rates for Ecommerce Sales

If you work in ecommerce sales, you understand the importance of free shipping. This is a service that customers have come to expect from online retailers. A staggering 80% of consumers say free shipping is a primary incentive for shopping online, and 48% of shoppers will add extra items to their cart to qualify for free shipping.

In order to keep up with this demand, you need to know the right way to structure free shipping rates. Here are some tips to get you started.

Free Shipping Isn't Exactly "Free"

By now, you probably know that free shipping isn't necessarily "free." You, the merchant, still have to pay for shipping the product, even if you are only charged a small fee for the service. To accommodate for that expense, you either need to increase the price of your products or find a less expensive way to product those products. Translation: raise prices or decrease costs. That's the only way to stay profitable while offering free shipping.

  • The distance between your customers and your warehouse
  • The size of the third-party logistics provider you work with (larger 3PLs often have volume discounts and faster turnarounds)
  • The size, shape and weight of the items you're shipping
  • The number of shipments you send out
  • The speed of the shipments

You may be able to adjust one or more of these factors to lower your shipping expenses. For instance, if you currently work with a small warehouse far away from your customers, your manufacturer, or accessible ports/highways, you may need to look for a different 3PL provider. The initial transition will be an expense, but you will make up for it in smooth turnarounds and lower shipping rates. Best of all, you can provide a better service to your customers which will lead to repeat business.

Understand Your Customers

You know what products your customers like, but do you know about them personally? Specifically, do you know where most of your customers live? This will help you select the best warehouse and shipping provider for your needs. If your products are mostly purchased from one part of the country, you will need to work with a warehouse and shipper that can get products to that location at a low rate.

Offer Free STANDARD Shipping

You don't have to offer the fastest shipping possible if it's free. You can provide free standard shipping and offer expedited shipping for an additional fee. If a consumer needs a product quickly, he or she will be willing to pay the extra cost for shipping. It is easier for someone to justify shipping rates for a must-have item than it is for something they're buying casually.

Talk to your 3PL provider about these shipping price points so you can transfer the costs accordingly. As long as you structure your free shipping services well, you can make money with ecommerce sales and keep your customers happy.

Contact Overflo at 1-800-626-0616 to learn more about the order fulfillment solutions available for your business.

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