If you run a small business, attracting customers will be at the top of your priority list. While this depends on various factors, one option is to offer free shipping with all e-commerce orders.
In this article, we focus on the benefits of free shipping and whether or not customers value it. We also explore how to cover the cost of shipping and ensure it is worth the investment for your business.
Benefits of free shipping
Many e-commerce businesses offer free freight on some or all of their orders as a way to entice customers. This gives customers a sense of financial benefit, meaning they are more tempted to place an order.
- Attracts new customers
- Builds trust with buyers
- Increases online orders
- Improves customer loyalty
Considerations to make when offering free shipping
For small businesses, it may be daunting to offer free shipping because it means your business will have to cover those costs. In this section, we explore how valuable free shipping could be and whether it is worth investing in.
Setting a minimum spend
Some businesses set a minimum spend for customers to qualify for free shipping. This provides an incentive to order more products, thereby increasing the Average Order Value (AOV) and your revenue. With this in mind, it may be worth setting a threshold of approximately 15% to 30% higher than your current AOV.
Do customers care about free shipping?
This depends on your customer demographics and products. Some customers prefer to receive their order sooner and may be willing to pay extra for that service. However, others will value the savings that come with free freight. On the other hand, another set of customers may want their order to be packaged in a fancy box with custom branding.
To ensure your customers are happy, we recommend assessing the types of orders you send. If you send luxury products at a high price point, a carefully considered packaging design will be more fitting. If you deliver packages that serve a practical function, speed is likely more important.
When making an e-commerce order, customers often value one of the following above the others:
- Delivery speed and tracking
- Product packaging and the unboxing experience
- Free shipping
- Secure and protected packages
- Quality of goods
How to cover the cost of free shipping
When offering free shipping, it is recommended that you factor the shipping costs into your product pricing model. Many brands build approximately half of the shipping costs into the retail price and then cover the rest as an operating expense.
We also suggest that you shift your perspective on these costs. Instead of a lost cost, think of free shipping as a marketing strategy. For example, you can use free shipping to convert customers who have abandoned their carts.
How packaging improves shipping costs
If you do want to offer free shipping, your packaging can minimise the weight and size of orders, thereby lowering the total expense. We recommend talking to our team to assess your existing packaging operations to determine which adjustments will deliver the best cost savings.
Cartons
Fishtail stock cartons keep your products safe and secure with an efficient assembly time. The base folds out and locks into place without any glue or tape, reducing your operational time and labour costs.
Courier bags
For lightweight and smaller orders, courier bags are far more cost-effective. They also come with built-in protection and can be made with sustainable materials, which may appeal to your customers. We recommend sustainable courier bags like our padded kraft mailers, eco-compostable courier bags, and cushioned paper courier bags.
Packaging tape
A high-quality packing tape keeps orders secure and contained, minimising the risk of damage and costly returns. We recommend tapes with strong adhesive and tear resistance.
Protectives
Protective packaging ensures your orders arrive safely and in peak condition. Our void fill pillows, loose fill, and corrugated cardboard are all lightweight and effective options, helping to minimise the risk of product damage.
Delivery instruction labels
Investing in delivery instruction labels ensures your orders are handled correctly and processed as efficiently as possible. This is particularly helpful for fragile products, heavy items, and perishable goods.
Is free shipping worth it for your business?
Offering free shipping is a significant strategic decision for any e-commerce business. While it can bring in new customers and motivate repeat purchases, the cost and logistics implications may put some companies off. Before making a decision, consider the following:
Alternative incentives
Besides free shipping, you may be able to attract customers with other benefits, such as loyalty programmes, express delivery, or discounts.
Bundle shipping
If customers are willing to wait a few more days to receive their order, you may be able to take advantage of bundle shipping. This way, it can be included in a larger shipment and cost less overall.
E-commerce packaging NZ
As a small e-commerce business, you need to stay ahead of customer expectations. Fortunately, the Primepac team is here to make your e-commerce shipping process run as smoothly as possible.
Contact us today for tailored advice or browse our full range of packaging materials, including:
- Cartons and boxes
- Protective packaging
- Packaging tape
- Pallet wrap and pallet wrapping accessories
- Packaging labels
- Warehouse Health and Safety equipment
- Warehouse supplies
- Custom packaging
- Sustainable packaging
For more information, download our retail and e-commerce catalogue. Inside you’ll find our recommended packaging supplies and advice for optimising your small business product packaging.
