Whether you sell through your e-commerce website or on an auction website like eBay or Amazon, you must have come across this question several times: "Should I offer free shipping to my customers?" Free shipping is a big attraction that could pull many buyers to your website or listings. But, the problem is how you will compensate for the cost of shipping.
There are various ways to offer free shipping without hurting your profits.
1. Include some portion of the cost of shipping in the cost of your product.
You must be thinking, will it help? Yes, it will help. People do comparison shopping before buying products online. And, when buyers compare the price of your product with that of your competitors with shipping costs included, they will find that you are selling the product at a lower price. Though this strategy will pull many buyers to your website, you should remember that people like to buy products at cheaper rates provided they are getting good quality too.
The next question that must be in your mind is how you will compensate for the rest of your shipping costs. The answer is through higher sales and economies of scale. When there are more buyers, you could save by buying your supplies and packaging in bulk. You might also save few dollars, as the cost of handling the products would come down. If you get a large number of orders in a day, you'll be able to dispatch products to your multiple buyers in a single visit to the post office or courier office, which will bring your operating costs down.
2. Offer free shipping on selected items.
Instead of offering free shipping on all your products, you could offer it on selected products in order to bring traffic to your website or listings.
For example, you could offer free shipping on products that are light in weight, like T-shirts and DVDs, and therefore have low shipping costs. But, remember that while developing such strategy, you should also keep in mind the weight of packaging. Some products like glassware and bone china are light in weight but their packaging is usually heavy.
You could also offer free shipping on items that you want to move fast. If you've got stock of cell phones that you're not able to sell for the past 2 months, then instead of waiting, you should try to sell them fast by offering free shipping. Your profits would be limited, but you'll not incur the losses that you would if those cell phones become outdated. Moreover, when people come to your website to buy cell phones, they might order other products, thus compensating for the loss of profit that you would be have on the cell phones.
Free shipping could help you to bring a lot of buyers to your website. Though getting buyers on the website is important, it is equally important to make good profits. Therefore, your aim should be to strike a balance between the two. You should try different strategies to know what works best for you. Also, you should keep a close eye on what your competitors are doing to attract buyers.
