By now, most merchants know that customers want free shipping. In the age of Amazon Prime and Buy Online/ Pick Up in-store, customers are becoming conditioned to seeing some type of free shipping promotion from their favorite stores.
Shipping fees are now a major conversion roadblock - 54% of online shoppers abandoned their carts due to expensive shipping fees and 39% left because shipping wasn’t free.
However, free or reduced shipping fees are only one component to consider when crafting your shipping strategy. Customers don’t just want their goods shipped to them for free, they want them shipped fast, too!
In 2017, nearly half of online shoppers said that fast and free shipping were equally important to them, with 26% saying they abandoned their cart because of slow delivery times (up from 22% in 2016).
In a recent survey, American shoppers said the top three factors that influenced their decision on where to purchase were: price (87%), shipping cost and speed (80%), as well as discount offers (71%).
If you offer the same shipping promotion as your competitors, that’s great! But you also need to make sure that your delivery timelines are competitive.
If your product takes a week longer to ship than your competitor, you’re probably losing share due to your shipping timelines. As more retailers shift to free shipping, shipping speed will become the next way to differentiate yourself through your customer experience.
How do I offer free AND fast shipping without losing money? I’m not Amazon!
At the end of the day, the majority of customers still care most about free shipping.
However, some customers are willing to pay a premium to get their order shipped faster - especially at certain times of the year, such as Christmas. Giving customers the option to upgrade to expedited shipping for a reasonable fee is a great way to meet their needs without losing your shirt on shipping costs.
Beardbrand offers free shipping, as well as expedited shipping for a reasonable upcharge ($9.99). This allows customers to receive the product much quicker:
Be sure to communicate!
Make sure you’re communicating shipping timelines clearly to customers throughout the shopping process.
Let them know early on in the funnel about any free shipping offers, but it’s also important to clearly communicate the estimated shipping times throughout the checkout process. This helps avoid any ‘bad’ surprises once a customer has placed their order.
Luxy Hair clearly communicates the estimated timeline for their standard free shipping on their cart page, and lets you know there will be an option for express shipping on the next page:
Fast Shipping offers are also another lever in your promotional toolbox! Free Shipping day was once a major “online shopping holiday.” But the ever-changing landscape of online shopping changed that - most major retailers now offer some type of free shipping promotion year-round.
A 2017 NRF survey found that only 12 per cent of consumers had finished their holiday shopping as of December 12, with shoppers having completed an average of only 61 per cent.
Fifty-one per cent of these last minute shoppers planned to purchase their remaining gifts online - this represents a huge opportunity for Fast Shipping promotions. Last year, we saw more retailers move toward offering Fast Shipping promotions during major retail holidays, especially as shipping cut-off dates loomed closer.
How do I know whether I should run a Fast Shipping promotion?
There are a few key items to consider before launching a Fast Shipping promotion.
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Relevance: Your product may be better-positioned to see a lift from fast shipping promotions at certain times of the year than others. For example, if you sell tents you’re more likely to see positive lift from a “Free 2-Day Shipping!” promotion the week before Memorial Day than Presidents Day.
Southern Tide offered a Fast Shipping promotion the week before the Fourth of July on their patriotic-themed apparel:
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Pricing: One question you might ask is: what is the minimum dollar threshold orders need to meet to qualify for free expedited shipping? Should you offer free 2-day shipping, or a reduced rate promotion (e.g. $5 2-Day Shipping)?
This will depend on your internal costs and margin structure, which will vary by merchant. But consider what your shipping costs are, what percentage of orders currently go out with expedited shipping and what your current average order value is.
Use a similar thought process to what you would use to calculate free shipping, but take into account the added cost for expedited delivery.
For example, if your shipping carrier charges you $15 for expedited shipping, you’ll need to generate enough incremental sales from the promotion to offset the added cost and still allow you to meet your profitability goals.
- Timing: Make sure you understand your shipping carrier’s cut-off deadlines and internal order cut-offs, especially if you’re promising delivery by a certain date (ex. December 24th), and communicate it to customers clearly. The last thing you want to deal with is irate customers calling when their products haven’t arrived by the promised delivery date!
Lastly, make sure you monitor the performance and cost of these promotions. Post-promotional analysis is incredibly important to make sure these promotions are adding value to your bottom line.
Setting a clear goal from the start of the promotion (i.e. increase sales, or activate new customers) will help you better gauge the success of the promotion once it’s over. Using data to monitor the front-end impact (sales, conversion rate, visits) as well as the back-end impact (shipping cost and margin) is an important part of this process.
