You’ve seen it before.
It’s called highway drafting.
I’m talking about those crazy cyclists who hang dangerously close behind a truck, trying to catch the truck’s draft.
The bike is able to go faster because in that sweet right spot of the wake of the truck there is less drag on the biker which in turn lowers the amount of energy required to maintain speed or speed up.
I don’t recommend what seems insanely dangerous behavior, but there a pretty fascinating lesson we can take away as entrepreneurs.
The major retail players with multi-million dollar online websites have a lot in common...one being that they spend hundreds of thousands of dollars testing their ecommerce strategies to improve conversion rates.
So, in the spirit of drafting closely behind what's been proven to work, here’s a marketing tip all small businesses that sell physical products can implement immediately!
It’s common during last holiday season for large retailers like Walmart and Target to offer free shipping for all items.
Nordstrom offer free shipping with no minimum for all purchases – as a guy, how do I compete with “But, honey, they offer free shipping! Can you imagine how much we’ll save?”
Business Insider reveals that in the first quarter of 2014, 58% of e-commerce transactions in the U.S. received free shipping as part of the order. One year earlier, just 48% of transactions came with free shipping.
Check out this super resource of major retailers who offer free shipping and flat rate shipping.
The challenge is that for retailers free shipping does not actually come free. So here are four creative ways to solve the free shipping dilemma:
This option is best if you offer one-of-a kind type products. Because your target customers aren’t easily able to price shop you, this type of promo lends itself perfectly to including the shipping into the item.
Make sure to make the Free Shipping offer a major part of your promotion strategy and watch conversion rates increase dramatically.
katespade.com specializes in unique bags and has nailed the free shipping strategy...she even offers free returns.
If you sell relatively inexpensive products, and your customers are of the mall-shopper mentality (ie. they’ll drive miles to save a few bucks) this option is for you.
A shipping threshold works the same way as malls do...you offer free shipping when an order totals a certain amount. It encourages people to buy more in order to save shipping fees.
Amazon has done this for years and currently has a threshold of $35. Make sure to check out what your competitors are offering before setting yours.
Realize that your threshold will be subject to your competitors lowering theirs at any given time in the spirit of competition. And if they are big players, you may not be able to match theirs and still make a profit.
If free shipping isn’t a viable option for you, a flat rate shipping option keeps things simple - and if done strategically will encourage your customers to order multiple products.
Pro tip: The flat rate should be “per order” not “per item” to be most effective in getting more items in to the shopping cart. Keeping the rate under $10 (like $9.95) is optimal. Anything much higher will result in cart abandonment.
This is a growing trend that is worth modeling. Amazon’s Prime program started the ball rolling in 2005.
What sets this option apart is that it’s all about building customer loyalty. Customers are enticed to join an “unlimited free shipping club” for an annual fee - and as an added incentive, Amazon offers a free 1-year trial.
1800flowers.com is another top retailer who has jumped on the membership bandwagon.
Free shipping is a promotional strategy that works as long as you choose the correct option for your business.
And as a parting thought, remember that selling is all based on human psychology...once you start offering free shipping, it is not easy to stop without impacting sales.
Seize the day and go sell something!
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