Turn Low Shipping Rates into Your Conversion Success Story

With recently lowered shipping rates, you now have one of the biggest conversion tools at your disposal. Learn how to combat abandoned carts with new shipping strategies.

USPS's recent price reductions on Priority Mail should be a cause for any merchant to celebrate, whether they are already with the carrier or considering a shift. The new rates, however, are far more than a cost-saving bonus for entrepreneurs; they also represent a powerful marketing tool through new free shipping potential. With the new rates in place and the holiday season upon us, it is time to rethink your business's shipping policies.

Coupons and other price reductions are most likely already part of your seasonal sales strategy, but the simply don't rival the power of superior shipping offers. Shipping costs are both the carrot and the stick--they attracts more conversions when they are low and are the greatest factor in abandoned carts when they are high. In fact, Wharton University of Pennsylvania's David Bell has conducted research in the area, and concludes that:

"A free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10."
Returning to the abandoned carts generated by high shipping costs, how much are you currently spending on marketing through SEO or PPC campaigns? How much money is at stake when these campaigns drive traffic that is lost during the checkout process due to the cost of shipping? Commerce is never an exact science, but you can begin to offer free shipping--or extend the range of your qualifying orders--and encourage a greater conversion rate by following a few best practices. Stephan Millies, Senior Product Manager at Volusion, offers the following guidelines:
  • Calculate your average order size (let's say $50.00).
  • Offer free shipping at a cart size about that (such as $75.00).
  • When pricing your products, factor in shipping costs so that you meet your profit goals if the average order size is exceeded.
Following these steps, you will likely find that you are overcharging for your current shipping practices, a policy that is leading to the majority of your abandoned carts. "Many of our merchants overcharge," Stephan says, "and that is killing their conversion rate. All the money spent on SEO and AdWords is wasted if people flake out over added costs."

For more information on the ways that shipping influences your conversions, be sure to read chapter 5 of our Ultimate Field Guide to Conversions.