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Free Shipping?? Offered it to your online customers?

By Last updated on: July 29, 2021

A free shipping strategy is critical in today’s online marketplace. You have 100% confidence in your product. The price can’t be beaten. Customer service is off the charts. You receive a customer’s order and prepare products for shipping. And then it happens…the shipping process begins, and this is where your control ends. Or does it?

Estimated reading time: 7 minutes

Shipping can easily make or break a relationship with your customers. It can have a significant effect on your bottom line. Shipping costs can be what turns your customers off entirely before they even complete a transaction. What are the steps you can take to ensure your customer has a great product experience from beginning to end? What should you look for with a free shipping strategy?

Free Shipping:  Do or Don’t

To begin with, as a shopper, free shipping is a significant factor in my online purchases. The first thing I do on Amazon is filter by Prime eligible. Other sites will instantly lose my business if shipping costs are too high. Why? I know there is a great chance to find the same or similar product from a company that offers free or discounted shipping. A June 2014 study from UPS and comScore showed that 58% of shoppers would abandon their cart if shipping costs are too high.

There is even a national Free Shipping Day that was started in 2008!  This year it is Friday, December 14, 2019.  Many retailers take advantage of this, just search Twitter for #FreeShippingDay.

1. Free shipping does not have to be Fast shipping

Keep in mind a free shipping strategy does not necessarily mean FAST shipping.  I am willing to wait a little longer to receive an item if it keeps shipping costs to a minimum, or better yet, means shipping is free.  Most shoppers prefer free to fast shipping – favoring free shipping over 5-7 days rather than paying a shipping fee to receive items in just a couple of days.  Moreover, many customers are willing to increase the number of items in their cart to qualify for free shipping.

2. Free shipping – with an *

A free shipping strategy might not make sense to offer free shipping on ALL of your products. Obviously, this would vary depending on what you’re selling.  However, look at specific products where you might want to boost sales. Would it help to offer free shipping to start moving these products?  Or offer discounted rates or free shipping on specific items only.

Alternatively, providing free shipping for minimum order amounts or items may help to offset your costs. Knowing the weight and basic shipping costs of popular items will also help determine where it makes sense to offer shipping price breaks.

3. Pass the Buck

While you may not want to spread shipping costs equally over all products, it may behoove you to include shipping costs (or at least a portion) in some of the higher-end, higher-cost items. Keeping smaller items at a lower price allows you to be competitive where shipping costs would be lower anyway. Passing on the shipping costs to consumers on the higher-end items might not sound ideal, but this is where the lure of “FREE SHIPPING” can come into play. Think about it: would you be more inclined to purchase something if the cost was a little higher than other businesses, but the shipping was free? Therefore making the total purchase LESS than the lower priced item plus shipping? I would.

4. Do Your Homework

Step back a minute and look at your packaging supplies. Do you need a 12x12x12 box to ship a product the size of a pack of gum? A quick search on the internet could provide you with various options that may be better suited for your particular product. The last thing you want is for customers to think they’re paying – one way or another – for wasteful shipping. Efficiency is key to a successful free shipping strategy.

Other Alternatives If Free Isn’t an Option

So what if a free shipping strategy is not possible with your online business. This is the case many times, margins might be too low, or the industry standard is abnormal. What else can a retailer do to make shipping a competitive advantage?

1. Real-time Shipping Quotes

It’s possible to set up real-time quotes in some shopping carts. While this may not be the cheapest option for consumers, it gives the customer a chance to see the actual cost. Knowing that they are paying only to cover the actual price instead of padding your wallet may be considered a ‘win’ for the customer. Plus, it helps take out the guesswork on your end.

2. Flat or Average Rate

Perhaps your products are similar in size and weight, and there is not much variety in the shipping costs. Charging customers an average amount of your shipping costs is easy to calculate strategy. In other words, a flat rate. However, what if you have a large variety of inventory and your products vary significantly in size, shape, and weight? Maybe you want to look at your average cost per pound shipped and use this to determine what shipping rate you will charge.

3. Cost Per Pound Shipped

cost per pound shipped Free Shipping Strategy

Regardless of what option you choose, the best thing for you to do to keep shipping costs at a minimum is to know your data.  It’s hard to choose where to cut costs if you don’t know where you’re overspending. Likewise, are you getting the best rates?  Could you save money by finding a better shipping method or carrier?

One option for a successful Free Shipping Strategy is to use the average cost per pound. This can determine how much to add to the sale price for each item.  You know how much each item weighs and you know the dimensions.  With Refund Retriever, you have access to see what your cost per pound shipped is for each UPS or FedEx service.

For example, say we are selling a 10-pound kettlebell with delivery to a house. The kettlebell costs us $5.25 wholesale.  If we use FedEx Home Delivery it will cost us about $11.26 on average looking at our report above.  The cost to the customer’s door will be $16.51 total, so we can determine the sale price. While this might not work in every situation, it is a very simple example or easy way to start.

4. Zone Charts

Where are the majority of your packages going? In addition, what is the average cost for that zone?  

Average Cost Report Free Shipping Strategy

If you know that 45% of your packages are shipped to Zone 5 and the average cost of your package to that zone is $15.51, you can use this to pad your sale price to cover the majority of your shipping costs across the board.  

I know of a few companies that use this rule,  and all shipping costs are eventually covered. This is not the best option in my opinion, but a viable option if you do not have the proper shipping technology in place.

Free Shipping Strategy Conclusion

A successful free shipping strategy will strengthen your online business and reduce shopping cart abandonment. Go with whatever shipping option is best for your business model. What will the cost of shipping be versus the cost of losing a sale? In summary, the best solution is to stay informed. Refund Retriever provides our customers with comprehensive data to give confidence in decision-making. That’s one option every customer deserves.

Brian Gibbs

Author Brian Gibbs

More posts by Brian Gibbs

Brian Gibbs | President of Refund Retriever

Brian Gibbs founded Refund Retriever in 2006 while running his first eBay-based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever's primary focus is FedEx and UPS parcel invoice auditing. After graduating from Texas A&M University in 2001, he graduated from the University of Houston in 2004 with a JD and MBA. Gibbs has been featured in Forbes, Entrepreneur, and other publications discussing parcel auditing, shipping, e-commerce, and more. Learn more at www.refundretriever.com or call (800) 441-8085 for more information.

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