How Maltese Businesses can offer Free delivery successfully
Free delivery is worth trying. As we discussed in our previous article, people will generally prefer free delivery even if the prices of the products are actually higher. This is because of two key reasons: First, an e-commerce store that provides free delivery enables a more simplified shopping experience. Second, people intuitively respond very positively to free services and products.
Free delivery is essential to decreasing friction in your customer’s journey and lowering cart-abandonment rates.
But offering free delivery is easier said than done. The last thing you want is to offer free delivery to your customers but go bankrupt in the process.
You don’t necessarily have to offer free delivery on every item to meet shopper expectations. Customers know that some items are too heavy or too large to ship for free.
In this article, we go through successful, tried-and-tested offers and conditions that can help your business offer free delivery successfully and sustainably.
1. Add the cost of delivery to the price of the product
The primary way to offer free delivery without too much difficulty is to include the delivery costs in the prices of the product. This way, the customer indirectly pays the delivery costs.
Remember that, for the consumer, the psychological impact of free delivery is much greater than a price difference of a few euros in the value of the product.
Still, make sure the prices of your products aren’t too much higher than those of your competitors. Moreover, distinguish between items that are elastic and prices that aren’t. A product is considered to be elastic if the quantity demand of the product changes more than proportionally when its price increases or decreases. If your product is elastic, increasing its price may not be your best move.
If you want to keep the increase in prices to a minimum, then there are multiple other conditions you can apply to your free delivery offer to make it more profitable.
2. Establish a minimum value per order to qualify for free delivery
58% of customers add more items to their basket in order to qualify for free delivery. Why? Well, the psychology behind this is simple – why pay €5 for delivery, when you can buy another item and avoid this charge? Whether it be a small add-on product or an item they’d previously dissuaded themselves out of, free delivery with a threshold is a pretty persuasive marketing strategy.
3. Offer free delivery on certain items
This one’s easy. Offer free delivery on certain items – try to prioritise high-margin goods.
4. Offer free delivery at certain times of the year
Some retailers offer free delivery periodically (such as during the holidays) rather than year-round. Depending on your products, test free delivery offers at other times of the year, such as Black Friday, Valentine’s Day and Mother’s Day.
5. Offer free delivery to members / loyal customers
If you’re expecting repeat-customers, then enabling the possibility of paying for a membership in return for free delivery can help offset costs.
A more simple route may be to offer free delivery as an incentive to encourage repeat purchases. In this case, customers that repeat purchases from your store get free delivery.
6. Offer free delivery on returns.
Buyers may find free delivery on returns appealing for items with relatively high return rates, such as clothing and footwear.
7. Flat-rate delivery.
This one isn’t free, but offering flat-rate delivery encourages larger orders and frequently translates into lower delivery costs for customers. A downside, however, is that it can discourage small orders.
Once you’ve selected which strategies will work best with your business, test and test.
Say you choose to establish a minimum value per order for customers to qualify for free delivery, test out different thresholds. Your customers may find that €100 is too high to qualify for free delivery and just give up, whereas if your threshold is too low you won’t make as much profit as you could. By carrying out multiple tests, you can find out the minimum value that makes customers go “If I spend a little bit more I’ll get free delivery, so it’s worth adding something else in the cart.” That’s the sweet spot.
Be clear on what you’re trying to find out and run your tests carefully. Maintaining consistency is essential to keeping customers returning, so ideally you run your tests once and then stick to a strategy for a significant period of time. Changing your delivery conditions every five seconds is going to confuse and discourage customers.
To maximise cost-effectiveness, thoroughly consider your margins, your audiences and which strategies best fit your business. To maximise the benefits of a free delivery offer, we recommend that you communicate with a marketing agency.
This article isn’t intended to turn you into an e-commerce specialist. Our goal here is to share information that enables business owners to approach e-commerce professionals from an informed position.