Yes, it’s possible to eliminate shipping costs in an eCommerce business, but you’ll need to study the practicality of this in detail to avoid any loss of profits. While free shipping is a good incentive for users, the company must be able to cover distribution costs while meeting the objectives that have been set. To do this, before eliminating shipping costs, it’s a good idea for eCommerce businesses to study the different options they can offer and monitor their own prices and stock to decide whether or not it’s a good idea to launch free shipping at that particular time. We’re going to explain this in detail.
When it comes to considering eliminating shipping costs, there are different models that you can choose from based on the characteristics of the store:
- free shipping on all eCommerce products
- free shipping for orders above a minimum purchase price
- free shipping for subscribers
Free shipping on all eCommerce products
This is mainly offered by eCommerce businesses with higher value products, like those who sell prestige brands or electronics, for example. These are items whose high price allows them to easily cover the cost of shipping needed to send the products to users. At the same time, since these are products with a higher value, slight price increases can be made without this affecting the customers’ willingness to buy, thus maintaining the profit margin despite the free shipping.
Free shipping for orders above a minimum purchase price
You can also offer customers the opportunity to choose: either pay for shipping costs or purchase a larger quantity of products. This option generates a better shopping experience since the customers see themselves as the ones that are in control of the situation since they’re the ones making decisions about their shopping cart. The experience of large marketplaces shows that customer satisfaction is greater if they pay for other products rather than for shipping. This model fulfils the objective of optimising sales, especially during times with high volumes of purchases, such as the current Christmas campaign or sales season.
Free shipping for subscribers
This is the model that Amazon and Fnac use, offering free shipping only to those clients that are already loyal and that pay the eCommerce business an annual subscription fee. This generates a sense of belonging and exclusivity in users that helps to accelerate and solidify their purchase decisions. In addition to free shipping, you can offer this already loyal target audience personalised sales that will catch their attention. These combined pricing strategies will result in an increase in sales.
Before deciding if your eCommerce business can afford any of these variants of free shipping, we recommend carrying out A/B testing on the various versions of your website. The results you obtain will be a reliable indicator of how your website will evolve in the medium and long term.
Afterwards, it’s a good idea to continuously monitor fluctuations in demand based on any changes made to your prices, policies, shipping, and market circumstances. This will allow you to anticipate adverse circumstances. To do so, eCommerce businesses can use a pricing suite where they can integrate multiple KPIs as well as all the information that is relevant to the business in terms of pricing.