How Can FREE Shipping be Profitable?
Mar 13, 2020 12:01 PM
How Can Free Shipping be Profitable?
Having your customers pay a significant amount for last-mile deliveries today is almost unheard of. With large e-commerce platforms offering free shipping as part of their strategy for growth, charging the cost price of your deliveries to customers will only deter them from purchasing from you. In fact, statistics have shown that customers are more likely to abandon cart because of delivery charges than the prices of the products themselves. There are many creative ways to offer free shipping without burning a hole in your pocket. In this guide are 5 practical tips that will guide you in a free shipping strategy that will minimise your logistics cost but still maximise profit to maintain business growth.
1. Consider Your Competition
Are you in the food, retail, eCommerce or logistics industry? Are all your competitors offering free shipping? Would offering free shipping be a way of differentiating yourself from them? Or would providing discounts be more than sufficient?
For example, companies that sell perishable goods still charge up to SGD15 for express delivery or same day delivery. As such, offering a price lower than what your competitors offers will already give you an edge. It does not have to be completely free! Alternatively, you can consider charging the same price as your competitors and promise a faster delivery experience with our 4-hour same day delivery service, which is more affordable than any other same day courier in Singapore. Learn what our rates are here: Pickupp vs Competitors: Why 4-Hour Same Day and Next Day Delivery is the Answer to Your Success
2. Should Free Shipping be extended islandwide across Singapore?
Before you invest heavily in free deliveries across Singapore, why not start by providing free shipping only to locations closer to your store or warehouse?
It is not uncommon to impose a delivery surcharge based on distance or on locations that are further away from your store or warehouse. This way you can minimise logistics cost but still provide free deliveries in some areas for your customers. Read more: Delivering Success: How did Cat & the Fiddle Scale Their Business? It was a Piece of Cake. If you're using Shopify for your eCommerce site, you can always set up shipping zones through the Shopify admin and determine where your store will ship to. If you're on Shopify and would like to use Pickupp's plugin on Shopify, check this article out.
3. Limit Free Shipping to a longer delivery window
While it may be essential to provide free shipping for a standard delivery window of about 3 – 4 days, you can gain additional profit by implementing a surcharge for urgent or express delivery options such as on-demand or same day.
You’ll be surprised by the customers that are willing to pay for these delivery options! While Pickupp offers regular delivery options such as our next day delivery and 1 - 3 days delivery services, you can also make use of our 2-hour express and 4-hour same day delivery services if you've any urgent and last minute orders. Each express order starts from only SGD $9 and corporate accounts are entitled to 15% off.
4. Other Free Shipping promotions
Free shipping can actually be a part of your business’ marketing strategy. Instead of just offering a discount on your products, you may wish to consider a free shipping promotion. Test and see if that helps to increase sales for your products!
If so, offer it from time to time and you could possibly earn profit from it!
5. List your products on eCommerce platforms that offer free delivery
You may also wish to explore listing your product on eCommerce platforms that will provide free delivery services. On top of saving cost on deliveries, it will be an opportunity for you to expand your reach and acquire new customers. Pickupp recently launched an eCommerce feature on our mobile app. Known as ‘Shop On Pickupp’, this platform features products that users can purchase and have delivered to their doorstep, free. A new product is listed on the app every 2 weeks. By partnering with us, you will gain access to more than 20,000 users on our platform as well as gain a reach of more than 50,000 in 2 weeks on Facebook, Instagram and Google. Learn more about how Shop On Pickupp works here: https://sg.pickupp.io/shop-on-pickupp