E-COMMERCE

By FedEx | First published: June 21, 2024    Updated: June 24, 2024

Free shipping can help your e-commerce business gain an edge over the competition. Check out our tips on how SMEs can offer free shipping to online customers.

• For online shoppers, free shipping can be an extremely decisive factor in committing to make a purchase.
• E-tailers that offer it can reduce cart abandonment, attract new customers, and retain loyalty.
• However, offering free international delivery needs to make sense for your business's bottom line.

Picture this: you’ve found a great pair of headphones online, clicked ‘check out’, and you’re already looking forward to wearing them on your morning commute. But when the shipping fees pop up, you realize the extra cost will push you over budget. You shrug and close the site – maybe you’ll look offline or find another option with free shipping.

What’s more, customers today expect free shipping. 38% of APAC consumers highlight the importance of free delivery when shopping online – nearly a third higher than those who cite coupons and discounts.

The numbers are clear: free shipping can help your e-commerce business gain an edge over the competition. But if you’re a small business, you may be wondering how you can offer free shipping without eating into your margins.

Free shipping: yay or nay?

Given the challenges of providing free delivery, it’s understandable that many small businesses choose not to do it. If you adjust product prices to cover shipping charges, customers may end up walking away. On the other hand, absorbing the costs yourself can hurt your bottom line.

That said, the benefits of free shipping often outweigh the drawbacks. A free shipping strategy can drive your brand’s success by:

• Reducing cart abandonment. Lower your risk of customers balking at extra delivery charges and backing out at the checkout.
• Driving cross-border sales. When customers know you provide free shipping, they’ll be more likely to favor your brand over rivals. This will help you seize cross-border opportunities as your business expands.
• Creating a positive customer experience. Free shipping makes the checkout experience smoother and more pleasant, boosting your customer satisfaction.

How to offer free shipping (while protecting your bottom line)

If you’ve decided that free shipping is right for your business, we can help you get started. Check out these five tips to implement free shipping without breaking the bank:

1. Set a minimum spend

When customers spend more in one order, your margins go up – making it more cost-effective to ship for free. One easy way to achieve this is by setting a minimum spend to qualify.

The number you set for your minimum spend threshold will depend on your average order value (AOV) and average shipping costs. Based on these factors, you can test out a range of thresholds that work for both you and your customers.

Ideally, your minimum spend will push customers to spend above your average order value, but not climb too high and scare them off from buying altogether.

You can also upsell your products by bundling them. Bundles are a great way to boost your AOV – think gift sets, themed collections, and subscription boxes. These incentivize your customers to spend more, especially with the added perk of free shipping.

2. Build free shipping perks into your customer loyalty program

Done right, free shipping can be a hallmark of your brand’s great customer experience – one that keeps customers coming back. By using this perk to drive customer loyalty, you’ll end up saving on customer acquisition costs over time.

For example, when a new customer makes a purchase, you can ask them to sign up for your email newsletter to qualify for free shipping. This gives you the opportunity to engage them and nurture repeat business.

Alternatively, how about giving new customers a discount code to unlock free shipping on their second purchase? This encourages them to shop with you again.

Another option is to make free shipping a reward for loyalty. For instance, only customers who have signed up for your loyalty program can qualify for free shipping. These tactics help you maximize your customer lifetime value, balancing out your shipping costs in the long run.

3. Offer free shipping at strategic moments

If free shipping all year round isn’t cost-effective for you, make it seasonal instead. Launch free shipping promotions during peak sales seasons for your brand, such as Christmas or Valentine’s Day. Shopping bonanzas like Double 11 can also be a cue to run month-long free shipping promotions.

During these periods, customers are more likely to splurge and spend big. Free shipping perks will help your brand cut through competition, acquire new customers, and drive profits.

4. Consolidate your shipments to reduce costs

With shipping rates on the rise, consolidated shipments offer a smart way to optimize your operations and reduce costs. Essentially, consolidated shipping combines multiple small shipments into one larger shipment, which will be de-consolidated at its destination and delivered individually.

This means you’ll share shipment costs with other shippers, giving you significant cost savings. In turn, it enables you to meet your customers’ free shipping needs, while streamlining your operations and improving delivery speeds.

This strategy is how Filipino fashion brand Anthill brings its indigenous textiles to clients around the globe. With nearly 90% of this SME’s sales coming from global customers, Anthill works closely with FedEx to consolidate international shipments.

“It’s a win-win; our clients pay less on shipping, without affecting our bottom line,” says Anthill co-founder Anya Lim. By working with a reliable logistics partner, your small business can develop a plan for consolidated shipments that meets your budget and shipping needs.

5. Choose the most cost-effective shipping solutions

There’s often a tradeoff between free shipping and fast shipping, and your customers understand this. Globally, 40% of consumers say they’re happy to wait up to seven days for international shipping if it’s free. Another 40% would be willing to wait up to two weeks.

This gives you the flexibility to opt for economical shipping services and minimize your shipping costs. Rather than splashing out for priority shipping, you may opt to save with solutions like FedEx International Economy. This way, you can give your customers the free shipping they love.

For Malaysian skincare brand CLEF Skincare, tapping into cost-effective shipping was key to breaking into global markets as an SME:

“Once we started using FedEx, we had immediate access to a host of e-commerce solutions tailored for SMEs like us,” says Kaii Lim, co-founder and CEO of CLEF. “We discovered an ideal balance between speed and cost, and I was able to pass the convenience of a hassle-free shipping experience on to my customers.”

Aiming for global success with e-commerce

While offering free shipping can be challenging as a small business, you can achieve it with the right strategy and shipping partner. This simple perk can help you beat cart abandonment, drive sales, and create a positive customer experience – all the ingredients your e-commerce business needs to stand out.

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Ready to get started? Find out more about FedEx International Economy or sign up for a FedEx account today.