Free shipping and fast shipping are hot topics these days as they gain popularity with customers to the point where these perks are expected. But if you have to choose, which is better to offer?
If you want to go straight for which one is more popular, free shipping wins by a mile. However, in many cases, customers expect free shipping to also be fast. In a study done by The National Retail Foundation last year, it was found that a whopping 75% of customers expect shipping to be free for orders under $50 and a further 39% also want that free shipping to be 2-day shipping.
We can see that consumers prefer free fast shipping, no choice necessary for the merchant.
But the truth of the matter is that you’re (probably) not Amazon, so you’re likely going to have to make a choice or play a delicate balancing act of offering parts of one and parts of the other.
Let’s discuss how to provide free shipping and fast shipping separately and then look at how to make the decision that’s right for your Shopify store.
How To Pull Off Free Shipping
It’s true that offering free shipping can be a boon to your business by increasing your conversions. But you’ll also face the onerous task of figuring out how to offer free shipping without going bankrupt or pricing out your customers. Here’s a few methods that merchants can utilize to offer free shipping.
1. Eat The Cost
This is the most straightforward option: calculate your average shipping cost and bake it into your prices across the board. However, it does come with a few pitfalls.
First, if you’re competing in your niche based on price, you’ll immediately lose your competitive edge. Your competition may be willing to take a slight loss on the shipping in order to undercut you and then suddenly you’re right back where you started.
Second, if you have very consistent inventory, it’s hard to suddenly raise prices. Repeat customers might feel betrayed and start shopping around, and your reliable best sellers may suddenly become dead weight.
2. Minimum Purchase
Offering free shipping with a minimum purchase is a great way to make sure you don’t suddenly have huge losses on tiny orders by offering free shipping across the board. If you’re going to eat the cost, make it worth it! Make sure that your profit on the order is enough to justify it.
The key to this method is making sure that your minimum purchase number is just a little higher than your average order - for example, if your average order is $25, offer free shipping with orders $30 and up. That will encourage your average customer to add just one more item to their cart to get free shipping. Ideally, the minimum purchase method serves not just raise conversions, but also average order value.
3. Free, But Slow
Keep your shipping costs as low as possible by offering only economy shipping for free. It’ll take longer to get to the customer, but they can make the choice to wait in exchange for not having to pay. It’s easier to absorb the cost of shipping when you’re going with the cheapest option.
How To Pull Off Fast Shipping
Shipping costs can be a major turn off to buyers. We’ve all seen the memes about how a $5 shipping charge convinces someone not to purchase their $500 cart. Fast shipping costs can be even more prohibitive to shoppers. So let’s look at a few ways to offer fast shipping that won’t block sales.
1. Offer As An Upgrade
Many Shopify stores don’t even offer fast shipping as an option, so you can frame it as an upgrade from free ground shipping. If they’d like to pay a little more to get it faster, they can, and you can charge them the real cost of doing so. The National Retail Foundation found that 71% of customers were willing to pay for 2-day shipping, so this is a workable option.
2. Make It Less Expensive
If you can make the faster shipping cheaper to begin with, you’ll have an easier time eating some of the cost (or convincing customers to pay for it). A smart way to do so is to implement zone skipping into your fulfillment process. The easiest way to start zone skipping is to work with a third party logistics company that has warehouses strategically placed around the U.S. Now you can spread your inventory across multiple warehouses and ship from the warehouse closest to the customer. Zone skipping can greatly reduce shipping costs at all levels.
3. Minimum Purchase
You may be able to work out a scenario in which you can absorb the cost of fast shipping and make it free, too, if the purchase is high enough. In this case, you can offer free fast shipping with minimum purchase. However, because of the high cost of fast shipping, you may want to make the minimum higher than you would when offering slow free shipping.
Conclusion: Making Your Choice
Every business is different, and every customer base is different. If you’re still on the fence between free shipping or fast shipping, consider offering each one for a limited time to see which one gets a better response. This can double as a super effective marketing tactic, as many customers are drawn in by the promise of free stuff.
When you run each promotion, pay special attention to what increases you see: for example, more email clicks, page visits, conversions, and reviews. If one of the options has a better increase than the other, you have your answer - you just have to decide if it justifies the cost.
Jake Rheude is the VP of Marketing at Red Stag Fulfillment, a warehousing company that focuses primarily on ecommerce order fulfillment. When he's not learning about what's new in the world of eCommerce, marketing, and logistics, you can either find him skiing in the mountains or at home in Knoxville with his dog Reagan.