12 Mistakes Small Businesses Experience With Free Customer Shipping

According to some recent studies, free shipping incentives offered by online retailers jumped approximately 10 percent between 2010 and 2011. While free shipping does influence customers to buy an item, this incentive requires careful management to keep your company in the black. If you avoid these common mistakes with free shipping, you’ll keep customers happy without bankrupting your business in the process.

12. Double-Shipping Items

When a customer buys a large amount of a certain item, it’s usually more cost-effective to have the package shipped directly from the manufacturer and not from the retailer. Evaluate the types of orders that you’re filling and avoid double-shipping as often as possible, so you don’t have to pay both to receive the item in your warehouse, and to send it off again.

11. Relying on a Single Carrier

You may use a single carrier out of a misplaced belief that this makes the shipping process easier. This type of shipping quickly becomes habit, but it isn’t the best way to do business. Carefully look at the path that each item is taking and find the least expensive way to get from points A to B to C. In many cases, you’ll find it’s cheaper to use hybrid-shipping options, such as using a private carrier for the first half of the journey and the U.S. Postal Service for the last leg.

10. Offering Free Shipping at any Price Point

Free shipping becomes costly in a hurry if you’re offering it for each purchase. A more effective strategy is to offer free shipping only when a certain price point has been reached. Determine what the average customer spends in your online store and increase this by 10 to 15 percent. This encourages customers to buy more to get the free shipping, thus increasing your average per-customer sales. Most online shoppers are happy to add a few extra items to their order if it means they can avoid shipping fees, even when the cost of the items exceeds that of the shipping.

9. Using Paper Instead of Electronic Options

Some shipping companies offer discounts for customers who forego certain parts of the paper process for electronic confirmations, receipts, and more. When possible, look for discounts like these when to lower your shipping expenses. Going paperless is also an eco-friendly move that allows you to promote your company as a green business. There are few disadvantages to using electronic alternatives and tons of benefits associated with this kind of move.

8. Failing to Make Up for the Costs of Shipping

It’s important to recognize that offering free shipping can significantly increase operational costs. Look for ways to recoup these costs as much as possible. One creative option might be to sell advertising space on your shipping labels or receipts, as long as you’re comfortable exposing your customers to the extra ads. Be creative and look for the best option for your business.

7. Offering International Shipping Without Adequate Research

International shipping is a completely different game from shipping within the country. Before you extend free or discounted shipping to international orders, look carefully into all the associated costs with shipping across borders. Offering discounted shipping for international orders is often a more manageable option than offering shipping that’s completely free.

6. Misunderstanding Flat-Rate Shipping Options

Flat-rate shipping is a great choice for dense, heavy items. However, it ‘s essential for small businesses to compare the price of standard shipping rates with flat-rate shipping. Never assume that the flat rate is the best option. Often, it’s much more expensive.

5. Assuming Shipping Rates are Non-Negotiable

When you’re running a business that ships to customers on a regular basis, you have a lot of negotiating power with shipping companies. Discounts are often available for quantities as small as 100 shipments within a predetermined time frame. Always negotiate for the lowest price so you can make the biggest profit possible, even with free customer shipping offers.

4. Failure to Examine Possible Shipping Supplies

Shipping supplies are another area where companies can easily fall into a routine without much thought to cost effectiveness. Evaluate your shipping supplies often to make sure you’re using the most efficient and cost-effective options. Consider a recyclable air cushion for environmental respect to keep delicate items safe without adding a lot of weight. Eco-friendly shipping materials also promote your company’s reputation as a green business.

3. Using Free Shipping as the Only Promotional Offer

Free shipping is undoubtedly effective, but it isn’t the only option. Consider offering your customers a choice between free shipping and receiving a smaller discount from their order. In the long run, your customers will probably still choose the shipping, but they’ll appreciate having the option.

2. Forgetting to Tell the Customers What They’re Saving

When you offer free shipping, it’s essential to show your customers the actual “dollar value” of what you’re giving them. If you don’t demonstrate this as a special discount in an obvious way, shoppers will begin to take this offer for granted. Make it very clear what your free shipping promotion is saving them so they will fully appreciate this offer.

1. Offering Year-Round Free Shipping

Free shipping isn’t something you necessarily need to offer all year long. If you roll out your free shipping promotion for certain seasons or special campaigns, you’ll have a better chance of increasing customer sales during these promotional periods. If you’re always offering free shipping, it will become something buyers simply take for granted without thinking about it. Use this promotion more sparingly to pad your bottom line and keep customers engaged.

A study of online shoppers who abandoned their shopping carts before completing the purchase revealed that 44% did so because high shipping costs were revealed at the last minute. Using free shipping prudently is an excellent way to increase your sales and encourage buyers to complete the purchasing process for every order.