How to Improve your Conversion Rates and Average Order values with Free Shipping
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We all know that free shipping is a must these days, customers expect free shipping to be available, even if it requires a minimum spend. In some countries next day shipping is the expectation as well especially given the prominence of Amazon Prime.
So, given the importance of free shipping to the customer, it makes sense that you’d clearly advertise this on your website.
But have you really thought about your free shipping offer? Have you calculated what that threshold should be? Or had a look at a couple of competitor sites and plucked a number out of thin air?
When done properly, with a few other features we’ll get to shortly, not only will a free shipping offer improve your conversion rates, but you’ll increase your order values as well.
A study by BigCommerce shows that free shipping offers can increase your order values by up to 30%! That’s huge! Almost a ⅓ increase!
But why is this? Why do people spend so much more just to avoid a £5 shipping fee?
Well think about it. If you’re spending £50 with a store, that shipping fee is a 10% charge. Why not put that 10% to good use by spending it on something concrete, something that gives you value. There might be an accessory someone decides to buy instead, or they might just buy something else they actually wanted instead, adding another £15-20 to the basket.
So then what you need to do is work out what that threshold should really be, to encourage people to hit it instead of dropping off, while also protecting your margins.
If your normal average order value is £35, then a threshold of £100 won’t help anyone, but at £50-55 you might find people willing to add that extra item or 2 to hit the mark.
Of course, a great way to do this is when someone adds a product to their basket, add some messaging saying ‘you’re almost there, just £15 more to get free shipping’ and then show off a few relevant products that they might like and you could have people meeting the requiring in just a few more quick clicks.
One final thing to remember is, if the shipping fee you charge does cover the cost of the shipping, then you need to make sure that when you’ve taken your margins into account, the extra revenue you’ve generated does at least actually cover the cost of shipping, otherwise you’re earning more revenue, but less profit.