How to Offer Free Shipping and Increase Profits

by Carolina Cano-Espinoza | 2-Day-Shipping, eCommerce Strategy, Free Shipping

 

Remember when ordering something online meant paying an exorbitant amount in shipping and handling costs and waiting 5-7 business days to get it? Well, that just won’t cut it for your customers anymore. Today’s online shoppers expect more from their eCommerce buys than just reliable delivery. Consumers EXPECT fast and free shipping and expect you to deliver.

Growing competition and increasing shipping promotions have created a new challenge for retailers. Businesses must now offer reliable, inexpensive or FREE shipping and fast delivery– all while dealing with rising transportation costs. In other words, the costs for online retailers are going up and customers expect to pay less. 

There’s no way around it– eCommerce retailers must provide fast and free shipping to compete in the current market. RSL’s recent webinar, “Free Shipping Solutions for eCommerce Retailers” addressed this conundrum with a panel of experienced eCommerce industry professionals who have witnessed the shift in consumer expectations. The live event presented attendees with proven strategies used by high-volume online retailers to offer free shipping and increase profits.

Access the full webinar recording HERE to learn how to apply these strategies to your online business.

The panel presented the following strategies to lower logistics costs for online retailers, along with tips on how to implement them:

Strategy #1: Leverage Carrier Relationships to Combat Rising Shipping Costs

A little negotiation goes a long way. If you have high shipping volumes, carriers want your business and are willing to give you lower prices to get it. Large fulfillment companies are able to pass down to their clients substantially discounted shipping rates by leveraging years of high volume, daily shipments. Take advantage of these volume discounts!

Company still ramping up? Focus on establishing a positive relationship with your preferred carrier(s) and prove growth by showing increases in shipments month over month. While discounts may be minimal at the start, small savings do add up! Evaluate shipping history on a regular basis and don’t be afraid to renegotiate.

Strategy #2: Utilize Multiple Locations to Reduce Cost & Time in Transit

Shorter distances equal lower shipping costs and faster delivery times. Shipping from multiple locations gives online retailers access to 2-day shipping without the fees of expedited delivery. Another benefit of packages traveling shorter distances? The ability to leverage additional savings through use of regional carriers.

Applying this strategy can be a win-win for both retailer and end customer. Not only will the cost to ship decrease, so will the waiting time of an anxious customer. Faster delivery can also lessen the workload for your customer support team. Shorter delivery times leads to fewer inquiries regarding delivery status from customers.

Strategy #3: Lower Freight Costs with an Established Freight Professional

Transportation costs make up 50% of the logistics expenses faced by eCommerce retailers! With the biggest expense coming from freight, it’s critically important to save when possible. Hire a freight professional to save you time and money. Freight brokers make money doing business with you based on what they’re buying and selling their service for; therefore, there is no upfront cost.

An experienced freight broker with established partnerships can leverage rates unavailable to the average retailer. This is a great opportunity to save you money! In addition to the cost savings, a freight broker will save you the time and headaches that come with managing multiple domestic and international freight shipments.

Strategy #4: Improve Efficiency in Fulfillment to Increase Profit Margin

Fast and accurate order fulfillment is a critical component to keeping costs down for online retailers. Too many inaccurate orders will destroy any eCommerce business. Lost revenue and costs of returning incorrect orders, re-shipping correct orders and additional administrative support can quickly drain profits.

Reduce the number of times a product is “touched”, beginning in manufacturing and throughout its life cycle in the warehouse. Simplify the fulfillment process to increase order accuracy and efficiency. Optimize the storage, picking, and packaging of shipments to reduce costs of fulfillment and increase profit margins.

Free Shipping Does NOT Have to Shrink Profits

While rising shipping costs and new technologies create obstacles for online businesses, applying the right shipping and fulfillment strategy can make free shipping profitable for your eCommerce business. “Free Shipping Solutions for eCommerce Retailers” delves into the importance of free shipping to increase profits and presents tips to implement these strategies to any online business.

Contact an eCommerce fulfillment consultant to learn how RSL can save you time and money on freight, order shipping and fulfillment.