In 2024, you're looking for more growth. Increased sales on your e-shop. And greater customer loyalty. An excellent program! But have you thought about the action plan you need to put in place to achieve these objectives while preserving your profitability?

Here's an idea to consider: free delivery. For customers, free delivery is a key factor in making a purchase. For companies, it's also a winning strategy, synonymous with conversion. But beware. Free delivery is never really "free". So how do you cover shipping costs and stay profitable? Follow the guide !

Free shipping: why offer free shipping ?

1.  Meeting customer expectations

 You know the old adage: the customer is king. Among the main expectations of connected consumers, the final price is a key issue. When placing an order on an e-commerce site, if delivery costs are too high... many abandon their shopping baskets. According to a Sendcloud study (2023), the presence of shipping costs is a reason for cart abandonment for 62% of e-buyers.

Visual source : Étude Sendcloud, 2023

The presence of delivery charges is even the main reason for shopping cart abandonment. Today, according to the Baymard Institute (2023), this abandonment rate is close to 70%! The best way to limit the loss of customers is to listen to their desires. Shipping is at the top of the list: 66% of American consumers expect free shipping on all their online purchases (PR Newswire, 2021). In France, according to Sendblue, 35% of French buyers expect free delivery on orders of €150 or more.

And do you know what your customers' expectations are? When creating your business plan, take into account the study of your target... To offer the best possible customer experience, including free shipping, under certain conditions to be defined.

2. Build customer loyalty

A satisfied customer is more likely to remain loyal. So offering them shipping costs will make the experience more pleasant... It lays the foundations for a lasting relationship based on trust, which will make them want to buy again from your e-commerce site or marketplace.

After all, delivery is a crucial element in the customer relationship. It even simplifies the purchasing decision. When it's time to validate their shopping cart, Internet users don't have to worry about additional costs. Less friction at the point of purchase means a greater chance of returning later!

By building customer loyalty (especially through free delivery), you also increase your profitability. Loyalty is a lever for growth: according to a Harvard Business Review study, a 5% increase in the loyalty rate can lead to an 85% increase in profits. Interesting, isn't it?

3. Align yourself with the competition

Your shipping strategy is directly influenced by your customers' expectations. And these expectations are often conditioned by other players in the market. For example, if a customer has always been accustomed to ordering beauty products with free delivery and no minimum purchase, you run the risk of creating strong purchasing friction if you decide to impose a minimum average basket in this sector.

This is why alignment with the competition is a decisive action. When defining your pricing strategy, analyze other companies in the market. Then choose the positioning that enables you to meet customer expectations, without damaging your brand image and conversion rate.

4. Increase the average shopping basket

The average shopping basket today is €68, compared with €62 in the first quarter of 2022 (source: Fevad, 2023). The good news is that, despite the current economic climate, this figure is on the rise. But to continue increasing the average basket, the best strategy is to offer customers free delivery.

The statistics bear this out: 58% of online shoppers add extra items to their basket to benefit from free delivery (source: Invesp infographic, 2023). So, is the solution to set a minimum threshold, to encourage shoppers to spend more to qualify for free delivery?

Suspense: discover the best ways to reconcile free delivery, customer satisfaction and profitability in the rest of this article.

How to calculate shipping costs ?

To calculate the shipping costs to be applied, the simplest formula is as follows :

This cost varies (sometimes significantly) according to the customer's geographical area. To optimize your calculations, you can therefore segment your shipping costs according to the zones to be delivered.

Then, to find out whether offering free shipping is a profitable strategy, we invite you to calculate a minimum threshold, above which you can offer free shipping. Here's the calculation to follow:

Shipping cost = average basket + average product cost - shipping cost

So, for example, if your average basket is 30 euros, the average cost of a product is 10 euros and the cost of shipping is 5 euros, the minimum order amount to qualify for free shipping is :

30 + 10 - 5 = 35 euros

Below €35, the sales margin would not be sufficiently attractive.

12 ways to offer delivery to customers

1. Unconditional free shipping

If your sales margins allow it, it's ideal : offer customers free delivery, with no minimum purchase ! With this strategy, you combine the best of both worlds. Satisfied customers and preserved profitability.

But beware: before opting for this method, you need to define and monitor certain performance indicators. Take the time to discover the key KPIs for maximizing your success.

2. Free delivery over a minimum purchase amount

This method is the most common in the world of e-commerce. The principle? Define the minimum purchase amount that allows you to offer free delivery, while remaining profitable.

By following the calculation above, you'll know the minimum amount that will allow you to amortize these costs. As a reminder, you need to know :

• Total costs per shipment
• Average basket per order
• Average sales margin per order

You can also look at the competition to find the right price.

3. Livraison gratuite à partir d’un nombre d’articles

Cette méthode ressemble à la précédente. Sauf que cette fois, la gratuité des frais de livraison n’est pas conditionnée à la valeur du panier d’achats, mais à la quantité de produits dans ce panier. 

Pour appliquer ce système, veillez à connaître la valeur moyenne par commande (VMC). Pour que cette méthode soit rentable, on recommande en moyenne de fixer un montant 10 % à 15 % supérieur à votre VMC… À vous ensuite de convertir cette valeur en nombre de produits ! 

Exemple ? Si votre VMC est d’au moins 20 €, et que vos produits coûtent en moyenne 5 €, vous pouvez offrir la livraison gratuite à partir de 5 produits achetés. Les paniers moyens seront d’environ 23 € en moyenne (soit 15 % de plus que la VMC). 

3. Free delivery on a certain number of items or more

This method is similar to the previous one. Except that this time, free delivery is not conditional on the value of the shopping basket, but on the quantity of products in the basket.

To apply this system, make sure you know the average value per order (AVO). For this method to be profitable, we recommend on average that you set an amount 10% to 15% higher than your AVO... It's then up to you to convert this value into a number of products!

For example? If your AVO is at least €20, and your products cost an average of €5, you can offer free delivery on purchases of 5 or more products. Average baskets will be around €23 (i.e. 15% more than the AVO).

4. Free delivery to selected locations

Another option for offering delivery to customers? Free shipping according to geographic zone ! For example, you may decide to offer free delivery only in France. Or in the Paris region.

This method is advantageous for companies wishing to establish themselves locally, and develop a customer base in a specific geographical area.

5. Free delivery with click and collect

More than a third of shoppers (34%) say they would choose click-and-collect delivery. This is 10% more than in 2022. (source: Retail Economics report (2022). At Rakuten, we're also seeing this craze: the number of "pickup" orders has risen from 27% in 2019 to 45% in 2023 !

By offering free click-and-collect pickup, you're not only meeting the expectations of modern consumers... but you're also putting all the chances on your side, to stimulate in-store growth. 70% of people who pick up parcels in-store make impulse purchases once they're there (Global Data, 2022).

If you're a Rakuten seller, this option is easy to set up: you can offer click and collect free of charge for all your stores by activating the Rakuten Instore option.

 

6. Free delivery on selected products only

To optimize your costs, why not offer free delivery on selected products only ?

For example, on lightweight, low-volume products, shipping costs are marginal... So offer them! Another example? On certain products, your sales margin is likely to be high. To attract buyers, you can also decide to offer free delivery.

Finally, this marketing strategy can be deployed during seasonal sales peaks. Do you have a clothing and accessories e-commerce site? Offer free delivery in summer, for purchases of swimwear or beach accessories!

7. Free delivery on certain days only

Some days are more profitable than others: that's what sales seasonality is all about. For example, do your sales explode during sales, Black Friday or just before Christmas ? Take advantage of these key moments to acquire new customers or build customer loyalty, thanks to free delivery.

It's also a great way to stand out from the competition. And if you can't offer free shipping during the busiest periods, adopt the opposite strategy: offer free shipping during the slowest periods of the year, to clear your product stocks.

8. Offer free shipping only to VIP customers

Free delivery is a powerful loyalty-building lever. In many loyalty programs, it's one of the most convincing arguments. Customers who benefit from this privilege are immediately more committed!

In 2023, 67% of customers say they are even more on the lookout for loyalty programs than before. 39% give priority to exclusive offers and free delivery... So, to meet the expectations of your most committed customers, you now know how to act.

9. Offer product returns free of shipping costs

Unlike physical stores, e-commerce doesn't allow you to see, touch or try out products. So, to encourage customers to place orders, here's a selling point: free returns.

By offering product returns, you're also offering customers maximum security. This gives them peace of mind when it comes to buying. According to a Canada Post survey, free returns are even the second most influential factor, after free delivery, when choosing an e-commerce site !

If you use Rakuten Fulfillment Network, this step is child's play. Find out how you can increase your sales with fast, reliable and cost-effective e-commerce logistics :

10. Free shipping on a future order

Here's a powerful marketing and sales argument for engaging your customers over the long term: offer free delivery on your next order.

To make the most of this advantage, don't hesitate to communicate with your current buyers by e-mail, after a purchase. Then, after a few days, send them a reminder of this special offer. To encourage them to take advantage of it, you can inform them that this offer is limited in time, with an end date in the near future.

11. Include shipping costs in the product price

What if the simplest solution... was to integrate shipping costs directly into the final product price? This strategy is winning over more and more companies in their quest for simplicity on their e-commerce sites.

But it's a double-edged sword. Beware even of its counter-productive effect... Because by integrating delivery into the sale price, the final amount may be higher than that offered by your competitors.

12. Test different approaches

One of the secrets of successful e-commerce sites? They test, improve, iterate and optimize their strategies. That's our final piece of advice.

Before finding the most cost-effective shipping system, don't rush: take the time to test different methods with your target audience. Ask your buyers what they prefer. Co-construction is the key to success !

 

Offer free shipping on Rakuten

Si vous êtes déjà vendeur sur Rakuten, activer la livraison gratuite se fait en quelques clics. Dans la section “Préférences” de votre Merchant Center, puis dans “Mes modes d’expédition”, vous pouvez choisir d’offrir les frais de port. 

Autre possibilité ? Sentez-vous libres de définir un montant minimum de commande ainsi que la zone géographique concernée. Vous pouvez aussi activer le retrait en magasin gratuit, grâce à Rakuten Instore.

If you're already a Rakuten seller, you can activate free shipping in just a few clicks. In the "Preferences" section of your Merchant Center, then in "My shipping modes", you can choose to offer free shipping.

Another option ? Feel free to define a minimum order value and the geographical zone concerned. You can also activate free in-store collection, thanks to Rakuten Instore.

When you join a marketplace like Rakuten, you get the best of both worlds: maximized profitability, on the one hand. A community of over 12 million responsive customers, on the other. What more could you want to launch an e-shop?

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