By the summer, eBay will be offering three-day delivery on 20 million items with no cost to customers. Any shipping charges from the online retail giant arriving late will be refunded and those items can be returned for free.
Customers will also be able to receive a $5 coupon toward another purchase when eBay’s new shipping policies take effect. Competitors like Amazon have lowered their non-Prime free shipping threshold to $35 dollars adding to the trend that’s putting pressure on small businesses and entrepreneurs. Statistics report that 95 percent of Americans shop online at least once a year. Over half or 51 percent prefer online shopping and 5 percent shop on the internet daily. Small independent businesses need to come up with new ways to offer free or cheap shipping that’s fast to compete.
Ecommerce Shipping Best Practices
Tom Caporaso is the CEO of Clarus Commerce, an eCommerce solutions provider. The company has been a leader in the space since 2001. Caporaso, an expert in consumer trends and online retail, offered some suggestions on how small businesses can improve their shipping methods.
Set Minimum Thresholds
Many retail experts feel this is a much more realistic goal than offering free shipping on everything. Having a minimum order value for free shipping is an excellent way for small businesses to encourage larger orders. Caporaso says choosing the right products will help to make thresholds like this work.
“If you know there are specific items that you have a little higher margin on, you can tie free shipping to them,” he says.
Establish Loyalty/Member Programs
Small businesses can also charge customers a small annual fee to become members. Offering free shipping can be one of the perks for joining up. Having the benefit of a loyalty or premium loyalty program can offset the costs to business of free shipping.
“You can have premium loyalty with free shipping offers,” Caporaso says.
Pick Certain Times of the Year
Offering free shipping periodically at specific times of the year is another option for small businesses looking to compete with bigger players. For example, consumer demand for free shipping is at a peak during the holidays when competition in the online space is aggressive.
Caporaso notes that a full 40 percent of the business for online retailers happens in the fourth quarter which is the holiday season. He says the period of November to December is an excellent time to offer free shipping promotions to boost your bottom line.
Depending on your product line, specific holidays like Mother’s Day and Valentine’s Day can be advantageous times to offer free shipping. Caporaso, whose flagship brands include Freeshipping.com and ShopSmarter, agrees:
“Time of the year promotions are great examples of how you can leverage shipping offers.”
Limit Free Shipping to Certain Areas
Some small businesses put restrictions on their free shipping such as only to destinations in the United States. However, the new innovation is being called ship to store. Entrepreneurs ship the products to a brick-and-mortar location in the hopes consumers will make additional purchases when they arrive to pick up their online orders.
Offer Free Shipping Across The Board
This makes sense for small businesses with small lightweight products. Offering free shipping on everything also usually includes stipulations like delivery via ground only.
Add “Free” Shipping To The Product Cost
This isn’t really free shipping but lots of small businesses embed the cost of delivering orders into the product price. While this can generate more sales, Caporaso notes entrepreneurs need to tread carefully here.
“There are many price comparison engines out there now that you can plug the same product in and get all the different price points,” he says.
Offer Flat Rates as Another Alternative
This is another option that doesn’t really qualify as free shipping, but implementing these flat rates does encourage larger orders. On the other side of the coin, flat rates discourage potential customers who want to buy single items or have a smaller order.
Regardless of the method you choose for your small business, there doesn’t seem to be any way around offering some kind of free shipping. It’s an important aspect of competing online and a trend that’s accelerating by popular demand.
“Free shipping has a very visceral response for consumers,” Caporaso says. “A lot of people don’t want to spend money on shipping.”
Shipping Photo via Shutterstock