We live in a “right now” kind of world. In the e-commerce industry, this means customers have begun expecting free and fast shipping. The quick delivery times to compete with companies like Amazon is an ongoing discussion, but what about reducing prices of shipping? There are four things to think about when trying to determine if your e-commerce store can find a way to offer free shipping. Let’s break down those considerations so you can better determine what your company is able to do.
The first thing you need to do is ask yourself, “can we afford free shipping?” This may seem obvious, but let’s break it down a little bit. You need to consider whether your online store can afford pay-per-click advertising or if you can afford to invest in SEO and other marketing strategies. If the answer is no, then there likely isn’t budgetary room for free shipping either. This is because offering free shipping is the same as any other marketing tool and it has the ability to deter or attract customers to your store and make a purchase. Free shipping, like any other strategies you may use, should provide a return on investment. This will require a bit of accounting work on your part, but it is important to determine costs before anything else.
Now that you’ve worked through the budget, you need to figure out how you can reduce shipping costs. There are three common ways to do this.
- The first option is to ship shorter distances or reduce your shipping area. It costs more to send a package across the country than across town. So, keeping things closer to home can help you reduce shipping costs. This is why Amazon has so many fulfillment centers to keep up with demand and shipping prices.
- Another option is to use efficient packaging. What this means is ditch the unnecessary packing supplies, because they cost money too. Pack your products in boxes that are the correct size or bag in order to reduce waste and save on packing costs.
- You should also consider streamlining the fulfillment process. Everything involved in getting a package out the door requires labor. Find time to figure out where you can reduce the amount of labor and labor costs and you will be able to figure out how to afford free or reduced shipping.
You now need to look at how much you are currently paying for shipping. Are you paying too much? It is very possible. Most carriers will offer rates based on volume, so the more you ship, the better the discount. Ensure that your suppliers are using your UPS or FedEx numbers to increase volume. It is also worth looking into local carrier companies if you are cutting your shipping region, they may be able to offer you deals that the big retailers don’t have the ability to.
You finally need to check out your website’s shipping estimates. Frequently, shipping estimates can be off, which can mess with your volume and price configuration. The answer is likely data related. In order to provide accurate shipping quotes, your site must send the package weight and dimensions and address to an application programming interface. This will use that information to create a shipping quote. It is important to ensure that your website is providing accurate and sufficient data in order to get this right.
If you want to be able to offer your customers free shipping, look at these four factors before anything else. Once you’ve made your determination, you can begin to change your strategy and better assist your clients.