Our latest post to help you improve your online drop shipping business will focus on one single tactic that can have a massive boost on converting visitors into customers: free shipping.
How do we know offering free shipping boosts sales?
Thanks to internet giant, Amazon, we now have a much better understanding of how shipping costs affect sales. Recently, they undertook a highly detailed study of online customers’ buying habits by following shoppers from the moment they arrived at their site all the way to their exit. One remarkable discovery that Amazon made was that almost half of all customers empty their shopping cart when they find out that the retailer doesn’t offer free delivery! The impact of this is obvious. You may have created the perfect website, chosen and curated the ideal items to sell, designed a successful marketing strategy that encourages visitors to your site, and promoted your products with well written listings and attractive images. With all these in place, your shoppers decide to buy, add your products to their basket and proceed all the way to check out – and then, once they see you charge a for shipping, almost half of them leave and buying nothing. That’s almost 50% of your sales lost. Or to put it another way, you could increase your current sales by almost 100% if you offered free shipping.
It gets even better
But it doesn’t stop here. Amazon also found out that if you do offer free shipping, three quarters of customers will actually purchase more than they first came for. So, for those of you who have been following Timber World’s Successful Dropshipping Techniques series and have put upsells, cross sells and bundles into place on your website, you now know that if you combine these with free shipping, you have a 75% greater chance of increasing your sales.
It works best for dropshippers
The best thing of all is that offering free shipping is much easier for dropshippers than it is for traditional retailers. Traditional retailers have to actually pay for the shipping out of their own takings, and so, by offering it for free, they have to take a smaller profit on their sales. When you retail using a wholesaler, like Timber World, who drop ships products on your behalf, you don’t need to lose anything – your margins can remain exactly the same..
How to offer free shipping without losing money
How do you offer free shipping if you use a drop shipper to deliver your products? Let’s take a look at how this works with Timber World log cabins. Imagine that you are selling a log cabin for £2000 and that the delivery cost Timber World charge you is £75. As a result you need to charge your customer £2075 in total.
Using he old way of trading, to try to make your product look more competitive, you would have advertised it at £2000. You would only mention the delivery costs right at the end of the buying process, when the customer had got to the check out. However, we now know that when customers see the £75 delivery charge, half of them will drop the purchase and look elsewhere.
Instead, you should now advertise your log cabin for £2075 and at the same time make a point of letting customers know this is with free delivery. You are still getting exactly the same price and profit as you were before and the customer is still paying the same price overall.
More importantly, the customer doesn’t know that the cost of shipping is built into the price of the log cabin, and so, psychologically, they think that delivery is free. This means that the 50% of buyers who would abandon the sale will now see it through to the end.
Even better, 75% of all your customers would go on to purchase an up-sale, cross sale or bundle – so you end up selling bigger log cabins with better specifications and a range of bespoke features. In the end, your £2000 initial log cabin could have developed into a £2500 sale.
So, the next time you are working on the pricing structure for your drop shipped products, remember that this is a clear advantage that you have over traditional retailers who find it difficult to absorb the costs of giving away free shipping.
Additional benefits for drop shipping on eBay and Amazon
There are other benefits too. If you sell on eBay and Amazon, your products are much more likely to rank higher in product search results when you advertise free shipping. eBay used to let you search for products by price so you could find the cheapest deals, now it’s price including postage and packing. Retailers who sell at lower prices with higher shipping costs can no longer jump above you in the search results. Nor can traditional retailers reduce their selling fees to compete better. These days all retailers have to pay eBay and Amazon a percentage of the total sales price, including delivery. Gone are the days when you could list products for a penny and charge £25 delivery fees just to get out paying eBay its 10% final valuation fee.
As a dropshipper, these changes really make it much easier for you to compete when you offer free delivery. You are also likely to get more satisfied customers and consequently better feedback if you advertise free shipping.
If you are considering selling log cabins or garden buildings and need a company which drop ship high quality garden buildings for you and provide you with outstanding customer support, then take a close look at our Timber World Dropshipping AccountTimber World Dropshipping Account. It’s free to join.