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Can Free Shipping Increase the Conversion Rate for Businesses?

E-commerce · 4 Mins Read

Can Free Shipping Increase the Conversion Rate for Businesses?

In a world where almost everything is digitally connected, e-commerce has become a major opportunity for many businesses. Even traditional retailers such as supermarkets are changing their techniques and hopping online, as reported by Forbes. However, jumping on this bandwagon comes with its own growing pains. Today, consumers are increasingly seeking personalised experiences and the e-commerce landscape has become more competitive than ever.

For businesses looking to target the virtual market, there are a few important factors to consider: How can you add value to your customers? What low-cost incentives can you offer? And how do you move them down the marketing funnel more effectively?

One of the solutions comes in the form of free shipping. According to a survey by Digital Commerce 360/Bizrate Insights, 67% of e-commerce consumers are already paying zero for their holiday purchases, it may be wise not to sit this one out. In this blog, we discuss how you can increase the conversion rate for your business through offering free shipping and how you can work it into your business model.

Benefits of free shipping for e-commerce businesses

Free shipping creates an impression of additional savings and convenience, which are both strong push factors to optimise the conversion rate. In fact, the Shipping, Delivered: Best Practices + Expectations 2019 report by BigCommerce revealed that a quarter of online shoppers were willing to give up coffee forever in exchange for this perk – and 84% of them made a purchase decision solely on free shipping options. 

Free shipping also gives people a reason to make purchases with a higher cart value. This means that with the same number of customers, your revenue becomes bigger.

With rising consumer demands, offering this value-added service therefore allows businesses to adapt to these expectations more easily, remain competitive and optimise their sales conversion rates.

How to use free shipping to increase sales

Many retailers probably already believe that additional logistics will eat into their profit margin. How, then, do these companies offer free shipping? With an adept strategy, it is possible to reduce business and operation costs by streamlining the process. Sellers can also market this as a unique proposition to draw customers in while maintaining or increasing the bottom line. Here are a few ways you can offer free shipping to increase sales:

1. Minimum cart value

Implementing a minimum cart value – or minimum order – allows you to effectively calculate your profit margin. Knowing how much each customer is spending and the product cost price means you can identify the break-even point. However, be mindful about setting too high a base spending level as this may deter potential customers from even considering a purchase.

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2. Higher product price

Similarly, you can also price the logistics cost into the product’s selling price instead. Instead of requiring a higher cart value, your consumers can now enjoy free or discounted shipping without feeling the pinch. Like the minimum cart value approach, gauging the earnings is also straightforward.

3. Promotional shipping

Timed promotions create a sense of urgency and FOMO – fear of missing out – in people, and is a clever tactic to achieve better conversion rates. One way to do so is by sharing free promotional codes which customers can use to offset the shipping fees. Or you can also offer free shipping only for clearance stock.

Promotions almost always create a positive impact in e-commerce conversion rates and allow you to be as creative as you want in devising the offers and mechanics. 

4. Outsourcing your operations

Now that you have started to offer free shipping for eligible customers, the next challenge is to stay on track and deliver. Today, the modern consumer has high expectations which include cheap and fast delivery of their online orders. For many businesses, building an internal logistics handling process may result in additional costs which they are unwilling to shoulder.

Transforming your supply chain process into an outsourced one helps you reduce cost and improve customer satisfaction. Going with a third-party logistics company that has the expertise and resources to develop an integrated last-mile delivery network for your business will ensure your deliveries are handled efficiently and competently. With a process-driven central control hub to coordinate the operations and value-added services such as same-day delivery, your customers will enjoy a seamless journey from carting out to unboxing.

The right conversion strategy

To consumers, free shipping is also welcome; and for some, a given. What used to be acceptable also no longer applies to the world today. Also focusing your efforts on increasing conversion rate optimisation (CRO) by sprucing your website’s speed and quality of content goes a long way in ensuring you drive more website traffic and hence, increase sales. 

With e-commerce shoppers expecting instant gratification with every click, it has become imperative for digital businesses to provide not just free, but also fast and efficient deliveries. On average, shoppers are not willing to wait more than three days for an online order to arrive. How you can meet or exceed these mounting expectations become essential in capturing and retaining customers, especially in an environment with little margin for failure.

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