Right now, shipping costs are reaching all-time highs around the world — and, thanks to Amazon, so are consumer expectations that the shipping fees they pay should be low or nonexistent. In fact, shipping prices can seriously hurt your sales potential. They’re a leading cause of cart abandonment — according to a recent Paypal study, 43% of shoppers say they abandoned shopping carts because the shipping charges were too high.
Clearly, shipping plays a key role in consumers’ purchasing decisions. But, just because Amazon can afford to offer free shipping doesn’t mean all of e-commerce can. Here’s how to make sure shipping prices don’t become a roadblock for your future sales.
1. Create a Free or Discounted Shipping Threshold
Instead of looking at shipping as a necessary business expense, consider it an opportunity to boost your sales. 93% of online shoppers are encouraged to buy more products when free shipping options are available.
The psychology behind this is simple — people don’t feel like they’re actually receiving anything when they pay a shipping fee. There’s no tangible benefit to spending that money. But, if they’ll actually be able to get their hands on a product, they’re willing to spend a little more. That’s how people end up in the camp of “I don’t want to spend $10 to get nothing in return, but I’m happy to spend $15 more than I originally planned if it means I get an extra product to unbox!”
How high does a sale typically need to be for your revenue to cover the shipping expense? Use that as a threshold for your customers to meet to get free shipping. If you don’t have as much wiggle room, you can try a discounted approach — “spend $50, get $3 shipping.” Or, take a tiered approach and try both — “spend $50 to get $3 shipping, or free shipping when you spend $75 or more.”
There’s even the option to tie shipping to a threshold that isn’t measured in dollars. If you’re shipping small products, it likely saves you on shipping costs if customers buy more than one item, because you can ship them together. Try offering a tiered discount based on the number of products they purchase — “get $1 off shipping for each additional item you purchase.”
Whichever of these methods you choose to try, you’re likely to see sales increase. It’s a smart way to play into that “I want to spend my money on something I can actually use” psychology.
2. Offer Other Ways to Snag Free Shipping
There are other valuable things customers can do to make it worth your while to cover their shipping cost — they can help grow your business, drive up your ratings or increase their lifetime value by becoming a repeat customer.
31% of online shoppers say they’d be willing to join a loyalty or membership program to earn free shipping. You can take the value of this up a notch by structuring a loyalty program around all the valuable things a customer can do to grow your business.
For example, create a points system and identify what actions a customer can take that would return enough value for you to cover their shipping. Then, assign a point value to each action, and establish a points threshold for free shipping.
A few points-worthy actions to consider:
- Making a purchase ($1 = 1 point, or 1 purchase = 10 points)
- Sharing on socials (microinfluencer win!)
- Answering a survey (get valuable data about what your audience wants)
- Leaving a review (boost those ratings)
You can use this method to further drive sales by putting an expiration date on the free shipping code your customers earn. This gives that little FOMO boost they need to jump on their free shipping as soon as they earn it. Plus, a strong rewards program is a great way to improve your customer engagement and build brand loyalty.
3. Give Free or Discounted Shipping to Subscribers
If your product works with a subscription model, a great way to encourage your audience to become subscribers (AKA, repeat customers with higher lifetime value) is to offer free or discounted shipping for subscriptions. You often see “subscribe and save!” offers applied to the cost of the product itself — but look at this as an opportunity to change things up and keep people coming back.
Avoid letting people take advantage of an endless loop of subscribing, getting free shipping, and then unsubscribing, though. When a user cancels their subscription, you’ll want to be clear in messaging that they won’t be eligible for free shipping on their next order, then. You can also avoid the loop by offering the free shipping on the first refill of the subscription — “subscribe to get free shipping on your next order!”
4. Make Shipping a Predictable Flat Rate
When free or discounted shipping just isn’t something you can afford to put on the table, you can soften the blow by keeping shipping at a predictable flat rate. Customers do not like surprises at checkout — so, anything you can do to keep shipping from feeling like an unpleasant surprise is great.
For example, if you have fairly high profit margins on most products, you can probably afford to set a flat rate. You may eat a little bit of the shipping cost on the lower-margin items, but ideally the high-margin ones make up for it.
To keep the element of surprise at bay for a flat rate fee, just be upfront about it. If your flat rate is $5, make that known well before the checkout page by putting it on a sticky banner above your website’s top navigation menu.
5. Bake Shipping into Your Product Prices
A smart and simple way to use that “I only want to pay for what I can touch” psychology is to build the shipping expense into your product pricing so you can offer free shipping. All you have to do is calculate your average shipping cost for each product and raise its price by that amount. Keep in mind, though, that doing this may mean you’ll need to raise product prices if and when shipping costs go up.
If you’re not comfortable working the full shipping cost into the product price, or think it will limit your sales potential by making your product overpriced, try pairing this tactic with the flat rate option. Add a portion of the shipping cost to the product price, and then charge a flat fee for the remaining cost. Again, this will need to be adjusted when your shipping costs change.
6. Lighten Up Your Packaging & Buy in Bulk
It may seem like small potatoes, but reassessing your product packaging and shipping materials can really lighten your load — literally and financially. Many e-commerce sites are shipping products in bigger boxes than necessary. Cardboard is heavy, and its weight is probably costing you more than you’d think. The small savings you get every time you switch to a poly mailer or padded envelope can really add up.
If you have a comprehensive plan in place for what products you’ll be selling for the next quarter or two, planning ahead and buying in bulk can help reduce costs, too. Measure and weigh your top sellers, hunt around for the lowest-cost, lowest-weight packaging options out there, and see if you can get a good discount by making a bulk purchase.
7. Take Advantage of Negotiated Rates
E-commerce platforms like Shopify will negotiate discounted pricing for businesses that use their shipping integrations. Shopify Shipping is designed to give e-commerce store owners the opportunity to band together with the platform and secure lower prices from USPS, UPS and DHL.
These negotiated shipping rates can save you as much as 88% off. To determine how much these options can help, start with the Shopify shipping calculator.
Key Takeaways:
As we all grow accustomed to having our Amazon purchases delivered on a next-day basis (usually for free!), our expectations for non-Amazon retailers are going up. Shipping cost is an increasingly important factor in the purchasing decision for most of us — we don’t want to spend money on something intangible.
Shipping fees that come across as a surprise or feel unreasonable can make or break a sale. Use one, or a combination, of the tactics above to keep your cart abandonment rates low and your sales up.