Think there’s only one kind of free shipping?
Turns out there’s SEVEN different “flavors” of free shipping out there for use in ecommerce as identified in the super cool infographic by freeshipping.org. As you know from last week’s blog post, free shipping offers increase sales and convert browsers into buyers.
Let’s determine which types of free shipping are most applicable to B2B organizations.
#1: Offer free shipping on everything you sell.
A strategy utilized by consumer goods sites with high profit margins (read: buying diamonds online), free shipping on any item, any order is probably not the best option for most B2B organizations moving into the B2B ecommerce space. Unless you sell incredibly large items (read: bulldozers, 8-color printing presses, or semi truck trailers), this probably isn’t the best strategy.
#2: Free shipping for members.
This is the shipping option that booksellers made famous–join their annual membership program and get free shipping on any ecommerce order. Chances are pretty good that this model won’t work for most B2B businesses, since most customers are already “in the club” by being customers. The only exception I can think of is businesses that offer a subscription service or automatic replenishement order option. Even then, membership probably wouldn’t completely eliminate shipping, perhaps just reduce it.
#3: Free shipping with a minimum purchase amount.
While this is probably the most popular free shipping program for B2C ecommerce, it could also work well for B2B companies. The key is to decide what you are trying to achieve with the free shipping promotion. If your goal is to increase sales as well as your average cart total, your threshhold will need to reflect an achievable increase over your current average cart total AND be enough of an increase to cover the cost of shipping with profit to spare. If your goal is to increase your ecommerce adoption rate–move customers from traditional channels to ecommerce–your threshhold order amount could be lower, at least initially, to entice customers to migrate.
#4: Free shipping on oversized, bulky, or heavy items.
Assuming that your margins are substantial enough, this free shipping method could be especially effective for large, industrial purchases or for bulky or over-sized items. To make this incentive work effectively, be sure to call out exactly which products are eligible for free shipping, what type of service is available at no charge, and if there are any limitations to the free offer.
#5:Free shipping to a local store.
This free shipping method could work in a dealer/distributor business model. Success would depend on how many dealer locations you have and whether they are conveniently located. Be sure to think through the costs of implementing such a program including actual shipping costs, resources available to manage the program on a local level, and dealer/distributor willingness to accept pick up shipments from web sales. You will likely have to compensate your dealer/distributor in some way in exchange for dealing with your online customers.
#6: Free return shipping.
Created to make the consumer feel more confident about his purchase, this free shipping promotion is likely to work with most B2B business models, provided that the size or weight of the items don’t crush your profit margins. Selling bulldozers? Probably not a good candidate for free return shipping.
#7: Free shipping based on location.
Lots of local customers? Offering free shipping to them could be a good way to thank them for their loyalty. Located in New Jersey and shipping to California? Probably not a cost effective way to drive conversions UNLESS the margins on the order are so big that you can easily eat the shipping costs without noticing. Most of your customers are in Hawaii, Alaska, or overseas? Definitely not a good way to drive ecommerce conversions.
#8: Flat rate shipping.
This was supposed to cover the seven ways to drive ecommerce conversion with free shipping, but flat rate shipping is probably a good fit for some B2B companies, so I’m including it here. In flat rate shipping, customers pay a set rate no matter what they order. This could be effective for B2B companies that sell small or especially light products where additional items are not likely to bump shipping up to the price level. Big or heavy products? Beware.
High shipping costs are the number one reason that people abandon ecommerce carts. By employing carefully selected free shipping offers, you can increase your conversion rate and your bottom line at the same time.
Learn more about B2B ecommerce success: B2B Ecommerce Success – Seven Questions to Consider When Beginning and Ecommerce Initiative.
Want to see the whole infographic? Check it out here!