How Green Retailers Can Boost Sales Through Free Shipping Deals

There's a new trend rippling through the online retail world and that is free shipping.  Not just any old free shipping.  Your basic free shipping deal has been around for ages, typically through limited-time offers or with restrictions, like minimum purchases.

We're talking about a no-strings attached deal. Just recently, long-time catalog retailer L.L. Bean announced that it would offer free shipping to the U.S. and Canada on all online purchases, no coupon code or mimimum order required and no end date.  To promote its new free shipping policy, the company even sponsored free rides on Boston buses that were wrapped in brown (a la the L.L. Bean package) and marked with “shipped for free” on the side.

Of course, this kind of offer is a whole lot easier for large companies like L.L. Bean to pull off.  Given its huge sales volume, L.L. Bean can negotiate better prices with shipping companies than can smaller businesses, which most green e-tailers are. 

Plus, as more and more companies jump on the FSALT (free shipping all the time) bandwagon, consumers increasingly view this policy as the norm, leaving e-tailers who don't offer it at a serious disadvantage.  FSALT is a challenge for green e-tailers who are already contending with low profit margins.  I can hear green e-store owners everywhere pulling a John McEnroe on me:  "You want me to eat the cost of shipping, too?  You can't be serious!"

Green e-tailers may not be able to adapt a FSALT policy just yet, but there are still many ways you can use free shipping offers to attract new customers and reward loyal ones:

1.  Time it with holidays:  Given the fact that many families and friends are far-flung these days, gift-giving holidays are a natural draw for online shoppers.  Why buy something at a retail store and ship it yourself when you can order it online and have it shipped by the company?  So take a cue from WalMart, which offered free shipping last fall for about a month leading up to the December holidays.  Time your free shipping offers with a gift-giving occasion when people are highly motivated to shop (and ship) online.

2.  Offer it to first-time customers only:  Drugstore.com is just one of many e-tailers that offer free shipping to new customers.  Drugstore requires a $25 minimum purchase, and so could you.  However, new customers are very expensive to acquire, and if eliminating the mimimum on free shipping helps ensure they complete their purchase, then the one-time hit you take on that particular order may well be worth it.

3. Require a minimum purchase:  I can't count the number of times I've shopped at Amazon.com and added just one more item to my cart so I could meet the $25 mimimum needed to get free shipping.  But notice that Amazon doesn't require a $75 or $100 minimum.  The free shipping offers from green e-tailers that we posted on Ecobunga! with these higher minimums received virtually no click-through.  So unless you only sell relatively expensive items then be careful of setting your free shipping thresholds too high.  For example, Brilliant Earth, which sells conflict-free diamond engagement rings and other jewelry, has a $300 minimum for free shipping.  At first glance that seems high, but virtually every item the store sells online is over $300 so it's a reasonable amount.
 
4.  Limit the product categories:   Another tactic is to restrict free shipping to certain types of products.   The most obvious restriction would be on bulky items which cost you a mint to ship (mattresses, furniture, composters all come to mind.) 

5.  Bundle it with a sale:   In our reader survey, we asked whether green shoppers considered free shipping a good deal. A majority said "yes", but a sizable number (43%) said that free shipping was a deal only when the product was also on sale.  So if you can afford to cover shipping costs while also offering a product discount, give it a try.

6.  Offer a low flat rate:  Overstock.com offers $2.95 shipping on any order to the lower 48 states.  Single low flat rates like this are another draw for customers.  It's not exactly free shipping, but it still feels like a pretty darn good deal, especially for larger orders.

7. Try free express shipping upgrades:  This is another good deal to time with gift-giving holidays, when procrastinators need to get that Mother's Day present there on-time, or else!  Try offering free upgrades to express or overnight shipping, especially as the holiday approaches and gift-givers are really in a pinch.

It will be interesting to see what other online sellers join L.L. Bean and offer customers FSALT.  In the meantime, eco-tailers should keep experimenting with free shipping offers, such as the ones above, to find the right balance between boosting their sales and maintaining their margins.  It can be tricky, but if free shipping becomes de rigueur, then finding that balance may be the only way to stay competitive.