The business of remote sales has changed a lot over the last few years, particularly as Amazon has added more and more perks to purchasing through them. The one that seems the most pervasive, creeping from Amazon to eBay and others, is the offering of free shipping. And while it may seem like this is an impossible perk to compete with, it is relatively simple to do so. In fact, it is critical. Here’s why.
Many in the industry believed Amazon was taking a huge financial risk by offering free shipping. It turns out that consumers embraced it. They were tired of not knowing what their final cost would be until after going through the tedious process of entering all their information, only to discover that the shipping cost made the purchase prohibitive. It turns out that knowing the full cost up-front via free shipping turned into record sales. Other markets were quick to react, and eBay even requires it of their individual sellers for them to receive the best perks of selling on eBay.
But your margin is so thin already that offering free shipping seems more like walking backward than forward. Surprisingly, though, a consumer would rather pay $25 for an item with free shipping than pay $18 with $7 shipping. The benefit of knowing the total outweighs the fact that there isn’t any difference in price. By adjusting your prices to include the shipping cost while stating that shipping is free you can increase your business exponentially. You can even offer expedited shipping services at a nominal fee that looks like a real deal because part of that cost is already written into your price.
Indeed, you will occasionally gain a little and also lose a little, on the shipping cost as you ship to purchasers that are closer to or further from your distribution centers. For the most part, this will even out, leaving your per-item profit the same. There are even steps you can take to make sure you end up in the black when it comes to shipping.
The first thing you can do is ensure your packaging is the best for the product. Even if you get a good bulk deal on a large quantity of same-size boxes, it doesn’t mean you save. The packing material used to fill the extra space for smaller items will eat that savings up. Having an array of box sizes that fit your products, especially if you have a static inventory, will save you on the cost of both the boxes and the packaging materials.
The best thing you can do, and this one is where the largest savings will come in, is investing in some sort of shipping control software. Multi-carrier shipping technology allows you to find the best shipping rates for your product. By scouring all the major carriers and letting you know which option fits best with the shipping method your customers have chosen. All of this happens with little effort on your part. Type in what you need, and the software does all the work while you reap all the rewards.
Now that you know that free shipping doesn’t have to cost you a penny, there is nothing to stop you from jumping right in… unless increased profits are something you’d rather avoid!