How to Offer Free 2-3 Day Shipping
Updated Nov 9th, 2023
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Profitably Offer Free 2-3 Day Shipping this Holiday Season: A Winning Strategy for E-commerce Brands
The E-commerce industry has experienced a monumental shift in consumer expectations. Today, the “norm” isn't just about having a variety of products, competitive prices, or even an easy-to-navigate website. It's about offering free, fast shipping. Offering free 2-3 day shipping can seem daunting, especially when considering the associated costs. However, with the right strategies, you can turn this challenge into a profit-boosting opportunity. Let’s dig in.
1) Harness the Power of a Shipping Carrier Rate Shopping Platform
One crucial step towards profitable free shipping is to minimize shipping expenses. This is where a shipping carrier rate shopping platform comes into play. These rate shopping platforms exist as independent software tools and are also often provided by tech-forward 3PLs (yes, including Rush Order).
A shipping carrier rate shopping platform is essentially a tool that helps businesses compare shipping rates from a variety of carriers. Think of it like a comparison website for flight or hotel prices, but for shipping rates. This platform typically integrates with your e-commerce or fulfillment system and automatically calculates the cost of shipping for each order based on the package weight, dimensions, destination, and the carrier's current rates (including fluctuating surcharges).
Here's how rate shopping platform offers numerous benefits to e-commerce brands aiming to offer free shipping:
Shipping Cost Savings
First and foremost, a rate shopping platform can lead to significant cost savings. It provides real-time access to the best rates from various carriers, letting you choose the most economical option for each shipment based on your discounted and/or retail rates available. The more carriers and service levels available, generally the better. You're no longer locked into a single carrier's pricing structure, and this ability to choose means you can make decisions that protect your bottom line while still offering fast, free shipping.
Fulfillment Efficiency
By automating the process of comparing rates, these platforms save not only money but also time. Rather than manually checking multiple carriers' websites and calculating costs, the platform instantly provides this information. This allows for faster processing of orders and helps meet your customers' expectations for speedy shipping and delivery.
Negotiation Power
Understanding the competitive landscape of shipping rates equips you with valuable information for negotiating contracts with shipping carriers. If you can show that another carrier offers lower rates for the same service, you might be able to secure a better deal. As your volume grows, each shipping carrier will want vie to become the most often selected option in your shipment rate shopping platform.
Improved Customer Experience
Rate shopping platforms can also enhance the customer experience. They can be used to provide accurate delivery estimates and transparently communicate shipping costs (when not offering free shipping), building trust and satisfaction among your customers.
Rate Shopping Flexibility and Adaptability
Market dynamics can change rapidly - a carrier may change its rates, or certain options may become more expensive due to external factors like fluctuating fuel surcharges or peak season surcharges. A rate shopping platform helps you adapt to these changes in real-time, allowing you to always choose the most cost-effective shipping method.
Shipping Carrier Rate Shopping: The Bottom Line
In conclusion, a shipping carrier rate shopping platform serves as a powerful tool for e-commerce brands. It provides a pathway to offer free, fast shipping to customers while maintaining profitability, which is key in today's competitive e-commerce landscape.
2) Smart Promotions for Increasing Average Order Value
Free shipping can be a powerful tool for encouraging larger orders and improving your margins. Average order value is an important metric in e-commerce, calculated by dividing your total revenue by the number of orders. Essentially, it tells you how much a customer typically spends per transaction. One way to offset the cost of free shipping is to boost this value, encouraging customers to buy more each time they shop with you.
Here are some tested and proven promotional ideas to do just that:
Minimum Order Value for Free Shipping
By setting a minimum order value to qualify for free shipping, you motivate customers to add more items to their cart and preserve your margins, despite giving away free shipping as a service. For instance, offering free shipping on orders above $50 or $100 can significantly increase your average order value. This strategy can help offset the cost of free shipping and turn it into a tool for upselling and cross-selling.
Tiered Discounts for Free Shipping
Offering tiered discounts incentivizes customers to spend more. For instance, offer a 10% discount when a customer spends over $100, a 15% discount over $150, and so on. This encourages customers to add more to their cart to achieve the next discount level. Another option is to offer a 10% or 15% coupon on a subsequent purchase, thus again enticing customers to come back and spend more money with your business.
Product Bundles for Free Shipping
Product bundling can be another powerful strategy. Combining complementary products and offering them at a slightly reduced price can encourage customers to spend more than they might have if they were buying these items separately (or not at all). For example, a skincare brand could offer a bundle that includes a cleanser, toner, and moisturizer at a price lower than the total cost of these items bought separately. When clients bundle, they may achieve discounts and/or unlock free shipping.
Free Gift with Purchase for Free Shipping
A free gift with a certain purchase amount can also motivate customers to increase their spending. For instance, a cosmetic brand could offer a free makeup bag and free shipping for orders above $150. It feels like a win for the customer and helps you increase the average order value by giving away a low cost item and shipping.
Volume Discounts
This involves giving a discount to customers who buy in large quantities. For instance, a clothing brand could offer 'Buy 2, Get 1 Free' on their t-shirt collection. This strategy encourages bulk buying, leading to a higher order value and an opportunity to again offer free shipping.
Limited-Time Offers
Creating urgency through limited-time offers can also encourage higher spending. Offering special deals like “Spend $100 and get free shipping – Today Only!” can create a sense of urgency that pushes customers to increase their spending.
In the real world, companies such as Sephora and Bath & Body Works have used these strategies effectively. Sephora often offers deluxe samples or exclusive gifts with purchases over a certain amount, while Bath & Body Works uses volume discounts with offers such as “Buy 3, Get 2 Free” promotions, again with or without free shipping as a “sweetener” for the deal.
In essence, boosting the average order value involves tapping into your customers' desires for value and exclusivity. With strategic promotions, you can incentivize your customers to add just a bit more to their cart, thereby increasing profitability while still offering the free shipping they desire.
Loyalty Programs for Free Shipping
A customer loyalty program can be an effective way to offset the costs of free shipping. For instance, members of the loyalty program could receive free shipping as a perk of their membership. Amazon's Prime and Costco membership are obvious examples that would be difficult for most brands to replicate at scale, but even something as simple as a newsletter or promotional text message sign up are examples of easy and technologically approachable ways smaller brands are achieving similar results.
As an example, perhaps a loyal newsletter subscriber or someone who re-posts your social media content can be eligible for free shipping. There are lots of options for creativity here.
Seasonal and Event-Based Free Shipping
Instead of offering free shipping year-round, consider tying free shipping to specific seasons, holidays, or events. For example, free shipping could be offered during the holiday season, when order volumes are high, or tied to special events such as a brand's anniversary. This approach can help manage the costs associated with free shipping while still leveraging its appeal to drive sales during key periods.
3) Leverage a Multi-Warehouse Strategy
Geography plays a significant role in shipping costs and delivery times. By strategically placing inventory in multiple warehouses closer to your customers, you can significantly reduce the distance a package needs to travel. This strategy decreases both shipping costs and transit times, ensuring your customers receive their packages within the promised 2-3 day window, thereby boosting customer satisfaction and loyalty.
As an example, let's delve deeper into how Rush Order leverages a network of strategically located warehouses to optimize shipping costs and transit times for its clients.
Rush Order's multiple warehouses, strategically located in the US across the West Coast, Midwest, and East Coast , as well as in the Netherlands, UK, Asia, and Australia, position our clients to cost-efficiently serve a wide customer base. This comprehensive geographical coverage enables over 90% of the US, EU, UK, Australia, Japan, and other populations to receive affordable 1-3 day ground shipping - an incredible feat that is not only customer-centric but also cost-effective.
By storing inventory in these multiple locations, Rush Order can dispatch orders from the warehouse closest to the customer. This approach, often referred to as distributed inventory, greatly reduces the distance a package needs to travel. Consequently, it cuts down on shipping costs and speeds up delivery times, meeting consumers’ demand for quick, free shipping.
For example, let's say a customer in South Carolina orders a product. Rather than having the product shipped from a single, centralized warehouse from a California fulfillment center (which would entail a longer transit time and higher shipping costs), the order can be fulfilled from the East Coast warehouse. This proximity significantly reduces the shipping distance and cost, allowing the order to be delivered quickly and affordably.
Likewise, for European and UK customers, our fulfillment centers in those regions serve as perfect hubs for fulfilling orders, ensuring similar benefits of reduced costs and quick deliveries. The same goes for Australia, Japan, Hong Kong, and other countries.
This distributed inventory model also provides resilience in dealing with unexpected disruptions. If one warehouse faces an issue such as a local weather delay, orders can be routed to another warehouse, ensuring uninterrupted service.
In essence, Rush Order's strategic approach to warehouse locations helps e-commerce brands offer fast, free shipping while keeping costs under control, maintaining high customer satisfaction, and ultimately, enhancing profitability.
4) Leverage a 3PL's Aggregate Shipping Volume
Partnering with a Third-Party Logistics (3PL) provider is another smart move in an effort to offer free shipping to your customers. 3PLs handle a large volume of shipments for various businesses, enabling them to negotiate better shipping rates with carriers due to their aggregate shipping volume. By leveraging their capacity, you can gain access to these discounts, making free, fast shipping more economically feasible. Find the best 3PL for your business.
5) Minimizing Dimensional Weight with Optimized Packaging
Did you know that shipping costs are often calculated based on the dimensional weight rather than the actual weight? This means that the size of your packaging can significantly impact your shipping costs. By using the smallest possible shipping boxes and envelopes that adequately protect your product, you can minimize the dimensional weight and thereby reduce shipping expenses.
Once again, 3PLs have tools to optimize packaging configurations and also negotiate better volumetric weight calculations with shipping carriers, which they pass through to their clients. Off the shelf software tools exist for you to manage this on your own as well.
As an example of packaging configuration in action, the initial onboarding process with Rush Order involves a thorough analysis of your product line and its packaging requirements. Rush Order will evaluate the size and weight of your products, assessing how to package them in the most efficient and secure manner. This process ensures that products are packaged in the smallest possible box or envelope without compromising on the protection and presentation of the items. This results in lower billable weights and thus lower shipping costs.
This initial setup is not the end of the process, though. At Rush Order, these packaging configurations are audited at least quarterly. The goal is to ensure the selected packaging continues to meet the brand's needs, especially as product lines evolve or as new shipping options and rates come into play. Regular audits ensure continuous optimization, reducing the dimensional weight and consequently, the shipping costs. Including a packaging audit as part of your regular quarterly business reviews (QBRs) with your 3PL is a best practice.
In addition to packaging optimization, 3PLs like Rush Order also offer a significant cost advantage when it comes to purchasing packaging materials. Due to the large volume of shipments they handle, 3PLs have strong buying power and can negotiate bulk purchase discounts with packaging suppliers. This benefit is passed on to the e-commerce brands they serve, further reducing operational costs.
These packaging optimizations and cost savings play a crucial role in an e-commerce brand's ability to offer free shipping. By reducing the physical size and cost of packaging, 3PLs like Rush Order help businesses maintain a robust, profit-boosting free shipping strategy.
Honorable Mention: More Ideas on How to Offer Free Shipping
Only Offer Free Shipping on Specific Items
Another strategy to consider is offering free shipping on specific items, perhaps those with a higher profit margin or that are easier and cheaper to ship. This approach can help drive sales of those products, increase overall profitability, and enable the offering of free shipping without impacting the bottom line too heavily.
Offer Flat Rate Shipping as an Alternative
While this isn't technically "free" shipping, offering a low flat rate for shipping can sometimes be just as appealing to customers. It simplifies the buying process, as customers know exactly what their shipping costs will be, regardless of what they buy or where they're located. This strategy can be particularly useful for businesses that just need to take some of the edge off of their shipping expenses.
Parting Thoughts on How to Offer Free Shipping
E-commerce brands can, indeed, offer free 2-3 day shipping profitably. It's all about being smart with your strategies - using rate shopping platforms, implementing intelligent promotions, adopting a multi-warehouse strategy, leveraging the buying power of 3PLs, and optimizing your packaging.
Adopting these strategies can help your business meet customer expectations, stay competitive, and most importantly, enhance profitability. Here at Rush Order, we are committed to helping you navigate these strategies for success in the dynamic world of e-commerce.
Contact Us today or pick a time below to schedule a free no-pressure consultation with a Rush Order shipping expert.
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