These days, it’s not discounts or clearance sales driving the lion’s share of purchases. It’s three things: free returns, same-day shipping, and, most importantly of all, free shipping.


When shipping can add an additional $5-10 to a customer’s final order, free shipping is like a gift from the heavens. Successful implementations of this, such as Amazon Prime, have proven how important it is to customers. There’s just one problem: from an eCommerce logistics perspective, it can be prohibitively expensive. 


Is it possible for a business to offer free shipping without breaking the bank? It is, and in this guide, we look at eight potential strategies.


1. Bump Up the AOV


AOV (average order value) isn’t about the price of individual products. Rather, it’s the revenue over a period of time divided by order fulfillment over the same timeframe. Essentially, how much money you make on average per order and/or per customer.


Customers wouldn’t like it if you raised prices. So the key is to offset the free shipping cost through other means. Here are a few possible tactics:


  • Promote financing options
  • Add gifts for ordering a certain amount
  • Offer discounts by volume
  • Give introductory offers
  • Bundle popular products together
  • Use product suggestions to cross-sell


The silver bullet for your particular eCommerce business will differ from everyone else. Experiment with these factors until you find a sweet spot that lessens the blow from free shipping. You’ll be able to keep prices even and avoid slapping on unnecessary fees, keeping customer expectations in check.


2. Create a Minimum Order Threshold


Free shipping could cause you to sell at a loss if it applies to everything. Shipping out a small single-order item for free adds up when you have to ship out hundreds of them. So instead, only offer free shipping once customers buy enough things.


Most businesses do this by setting a hard value. For example, customers must spend at least $50 to qualify for free shipping on their orders. Regardless of which products they choose, you aren’t hurting to keep to your free shipping pledge.


Like with finagling your AOV, find that sweet spot of value versus the cost of free shipping. Even small margins can have a big impact here. Plus, setting this threshold gets customers to buy more!


3. Introduce a Membership Plan


Amazon Prime has been massively successful, but it isn’t a free-as-in-free-beer offering. The eCommerce giant charges customers for the privilege at $139 annually, or $15 a month. Despite the high price of entry, the success speaks for itself.


Granted, this only works if you have the sort of customers that buy en masse on a regular basis. Subscription-based services, like monthly razors or delivery meals, excel with this strategy.


Choosing the membership route might not provide immediate results in order fulfillment. Instead, the increased business, plus new membership revenue, will balance everything out later on.


4. Introduce a Loyalty Program


When the average person has half a dozen subscriptions, many are reticent to add one more. Your eCommerce business may not add enough value proposition for the everyday person to subscribe as a member. For those not interested in membership, there’s a loyalty program.


Loyalty programs are simple enough: make regular purchases, get points. Customers have an incentive to continue returning to your business. Those points accumulate and go toward some future benefits, like purchase discounts.


The cost of providing those benefits, like membership perks, evens out with their continued business.


5. Limit the Free Shipping Radius


The farther customers are away from fulfillment centers, the more you have to pay to ship to them. Free shipping won’t exactly work if everyone who buys from you is in Alaska. Consider being selective with customer zip codes.


It can be painful to box out paying customers no matter where they are. But you’ll find that giving special treatment to those in the closest urban centers provides greater returns. It’s often a sacrifice catering to far-flung patrons who want the same free shipping benefits.


Of course, this is only an issue if you partner with a 3PL that doesn’t have a broad distribution reach. That brings us to our next point.


6. Work With a Widespread Network


Make sure your logistics partner has a far-reaching and innovative network. Why? Simple enough: more locations means reduced shipping costs.


Shipping can really eat into your budget when you have big fulfillment centers servicing a wider area. Instead, having small centers and multiple transition hubs is more effective. Especially if you plan to implement a free shipping service.


7. Focus on Ground Shipping


Much of the reason same-day and next-day shipping is possible is thanks to air transport shipping. Industry titans like Amazon have entire fleets of 747 cargo planes cycling between their largest fulfillment centers. It allows for fast shipping, but it is expensive.


Ground shipping is, obviously, much cheaper, all things considered. Limiting yourself to ground shipping will be slower, but make the free shipping promise realistic. Most customers expect free shipping to take longer by default, so there’s no skin off their nose to wait.


8. Let Your 3PL Partner Make It Work


Since free shipping is mostly a logistical affair, there’s only so much you can do on the supply side. Instead, leverage the expertise and established logistics network of a qualified 3PL provider.


You can crunch the numbers all day long, but you may discover the impediment to free shipping is one beyond your control. It’s a lot easier to present the challenge to your 3PL partner and let them solve it.


The solution could be as simple as optimizing your supply chain. There may be obstacles like delivery exceptions and a poor cycle time. Whatever the issue, your 3PL provider can iron it out.


Find eCommerce Logistics With ACI Logistix


Free shipping provides a surprising challenge when it comes to eCommerce logistics. You may need to implement a combination of factors, from a minimum order limit to membership and loyalty programs. These help offset the cost of free shipping without negatively impacting the customer experience.


ACI Logistix helps you find effective – and innovative – logistics for e-commerce businesses of all kinds. Drop us a line and let us help you make free shipping a reality, among other things.


Join our Newsletter

Get all the latest news directly to your inbox!


Join our Newsletter

Get all the latest news directly to your inbox!

Related Posts