Alright, time for ecommerce tip #4. When we last spoke I was advising (begging!) you to plan out your landing pages. Between that, punching up your copy and getting rid of that freakin’ registration page, I’m sure you’re swimming in the conversion rate by now.
Of course, who can have too many customers? Well, you, perhaps. You could be leaving customers on the table if you have a confusing shipping policy.
Welcome to…
Ecommerce Tip #4 – Improve Your Shipping Policy
There are 4 types of shipping policies:
- Those that discourage you to buy (expensive or confusing shipping)
- Those that encourage you to buy (free or flat rate shipping)
- Those that encourage you to spend more (free shipping if you spend $X)
- Those that are neutral (fairly price and intuitive)
The first rule of shipping policies is: do no harm. Your shipping policy should not be the factor that keeps someone from buying. Here are some common mistakes:
- Shipping Only To The Billing Address – People buy gifts. If you only shipping to someone’s billing address, you’re leaving money on the table. Don’t forget gift receipts!
- Forcing People to Dig for Details – Make your shipping information easy to find. Think about the places people want to see the information: before they buy (provide an estimator), in the FAQ section, in the Help section, on product pages, etc.
- Make Them Wonder About Timing – It’s not just the price of shipping people care about, it’s how long it takes to get there (especially for #1). Wherever you spell out your fees, spell out the time.
Taking care of those things should help you get closer to #4 – a neutral policy that doesn’t harm you.
Still, there’s probably still room for improvement. Let’s look at the elements of shipping policies that can help you convert more prospects to sales:
- Flat Rate Shipping – This is the Indian buffet of shipping. It works because it’s easy to understand and it encourages high value orders. The consistent price means repeat shopping is a no-brainer.
- Free Shipping – Free is a magical word. It lures customers in and gets them to focus on what matters most: buying. Here are some tips for free shipping offers.
- Free Shipping Upgrade – Charging the standard price for expedited shipping is another differentiator. The marginal increase for USPS rates is pretty small, but the speed increase can make all the difference for a hurried customer.
- Gift Wrapping – Gift givers, especially some of the men folk, love this option. No muss, no fuss!
Update: I stumbled upon a book all about free shipping called, not surprisingly, The Free Shipping eBook. Worth a download.
What are your shipping policy tips and questions?
{ 6 comments… read them below or add one }
I am trying to put appropriate wording together for the ‘Shipping & Returns’ link for a non-profit Nature Center website, selling items like t-shirts, hats, etc. Do you have an example I could follow…?
Hi Jeralyn,
Alas, I don’t have a sample for you. My gut would be go with what’s fair for you and your members given your budget constraints. You can always test and tweak it later.
-Alex
Thank you for all the information, you have help me out a whole lot. I now see that shipping is an important part of growing your business. I would like to offer free shipping but my profit margin will not allow this. Amazon sells an item that I can not even carry, it is a microphone that cost $86.00 wholesale, the manufacture requires every merchant to sell it for no more than $99.00 Amazon is able to do this and still offer free shipping. I guess volume matters too!
I agree with Microphone.co. The same is our problem with what our MAP price is and what Amazon is selling the item for. We tried to offer free shipping for about four months but did not make any money after expenses. We are having to rethink our whole pricing and shipping policy. I found this post by accident tonight. It has helped me process some information about how to work out our shipping policy. Thank you, Alex.
You’re both welcome.
Basically, you’re talking about two possible scenarios. In either case, we’re talking about maximizing profit
1.) Offering free shipping
2.) Free shipping alternatives
1.) If you offer free shipping, you obviously have to still make money. So the question is where can you make up the profit?
There are a few options
- You could set the minimum high enough to ensure that the order is profitable and potentially push some incremental revenue
- Limit free shipping to certain products where the margin is high enough to be worth it
- Limit free shipping to certain customers. Not everyone has to get the offer. On site behavioral targeting software, like Monetate, can allow you to just show it to returning customers, high value customers, new customers or people who are browsing high value products. You could also limit the offer to certain people through email, for example cart recovery. It might also be an effective offer in your display ad retargeting campaigns.
Keep in mind that if you have a higher lifetime value for a certain type of customer (say someone buys a subscription to a product or people who buy at full price), you should factor that into your allowable customer acquisition costs.
2.) Free shipping isn’t your only option to get people to buy. Shipping is a factor of price and also psychological hurdle in buying. There are other ways to get people to buy aside from discounting.
- Compete on something other than price. Conversion rate optimization can make a huge difference and it’s a sustainable advantage. Maybe you make service your point of differentiation. Maybe it’s tons of product detail and videos on your pages. There are other things to get people to buy than just free shipping.
- Flat rate shipping can help, as it’s less complicated to understand.
I hope that helps!
-Alex
Hey Alex, nice info – its tricky wording shipping policies not to harm without protecting/ covering yourself. Trying to include the key protection elements such as ” re delivery fees” and ” damages ” are what we find are the hardest ones to try and blend in to not scare customers away. I am from down under and flat rates are a scary way of ecommerce shipping due to the distance of the remote buyers. Huge price fluctuations for our country towns ..and these are the guys buying ( due to no local stores ) A delecate balance none the less. Hey thanks for your shipping policy info John.