How To Implement Free Shipping On Your eCommerce Store? | Shipway Blog

4 Ways To Cover Costs When Offering Free Shipping

The key objective of providing free shipping options to your consumers can be a marketing strategy to attract and retain customers. 

However, at the same time, businesses also need to make sure that they should remain profitable at the same time. Some of the effective solutions to cover the costs of free shipping are listed below:

1. Increase Product Prices

Although ‘free shipping’ implies no cost to the customer, many businesses incorporate shipping costs into the product price. By slightly increasing the price of items, companies can cover shipping expenses without incurring losses. 

Customers often prefer consistent pricing over unexpected shipping charges at checkout. For example, a product priced at $20 could be increased to $30 when including the shipping charge. And customers are less likely to object to the higher price if they perceive the shipping as free.

2. Provide Bundles or Raise Average Order Value

You also need to motivate your customers to purchase multiple items that can help offset shipping costs. One way to do this is by setting a minimum order value for free shipping, like providing free shipping on orders above $50. 

Additionally, businesses can provide bundling options at checkout. This suggests some complementary products to increase the total order value. For instance, offering a bundle of shower gel, body butter, and body oil can help the customers to spend more. This covers the shipping costs through higher sales volumes.

3. Use a Member-Only Model for Higher Customer Lifetime Value (LTV)

Investing in customers who make repeat purchases can be more cost-effective. Implementing a member-only model for free shipping can encourage customer loyalty and increase LTV. 

For example, H&M offers free shipping to members, incentivizing more customers to join their membership program. This strategy is even more effective if membership is free and includes additional perks like exclusive discounts and early access to sales.

4. Create Limited-Time Free Shipping Deals

Testing free shipping in eCommerce during limited-time events like Black Friday, Cyber Monday, or End-of-Season sales can provide valuable insights without a long-term commitment. These events usually see higher average order values, making it easier to maintain margins while offering free shipping. 

Additionally, limited-time free shipping can help clear out excess inventory that might otherwise remain unsold. This approach allows businesses to experiment with free shipping, understand customer behavior, and adjust strategies accordingly.

Properly implementing these strategies, businesses can offer free shipping without compromising profitability, improve the overall shopping experience and drive higher sales.