Get Your Site Into Shipping Shape This Season

With gas prices higher than imagined, retailers will be turning to low flat-rate shipping and free-shipping promotions to convert price-sensitive shoppers.

With the holiday season approaching and gas prices still higher than anyone could've imagined, analysts predict more consumers will shop for Christmas gifts online this year to save at the pump. Low flat-rate shipping and free-shipping promotions may be the most effective means to attract and convert price-sensitive shoppers.

Consumers consistently rate free shipping as their most sought-after promotion. "Sticker shock" from higher than expected shipping charges is considered the top reason for abandoned shopping carts. Last year's economic conditions prompted online sellers to be very aggressive with shipping promotions -- offering lower qualification thresholds, free overnight shipping and even free return shipping.

Controlling shipping costs
How can you control costs when offering online shipping deals to your customers and prospects? Think about how to work with carriers. You could work with several carriers and ship each order based on the cheapest option, or develop loyal relationships with fewer carriers. Opinions are mixed on which of these options is better.

Patrick Sedlak and Jeff Mueller of Sedlak Management Consultants, a Highland Hills, Ohio-based logistics and supply chain firm, advise against putting all your accounts in one basket. These days, they say, with carriers' rates constantly changing, having a choice allows you to cherry-pick deals in real time and can save you money in the long run.

What's more, rate-shopping software like AnyRate or Logicor integrates with warehouse management systems to help determine the lowest rate from a number of carriers on a per-parcel basis. Prices are quoted according to dimension, weight, destination and delivery date.

Zachary Applegate, search and marketing manager, and Ryan Douglas, Internet marketing manager, for PlumberSurplus.com, a Riverside, Calif.-based online seller of plumbing supplies, prefer to build relationships with carriers.

The more volume you do with a carrier, the more leverage you presumably have to negotiate better rates and better service. Price is not the only consideration; speed, reliability and customer service all are important as well -- especially for fragile or oversized items. The costs of damaged goods, return shipping and unsatisfied customers can outweigh the cost savings of a cheaper carrier.

In terms of controlling costs, also understand that free shipping doesn't have to be universal. There are several ways you can offer free shipping. Consider these four:

1. Restrict the offer to higher margin products or items with low shipping weight and dimensions.
2. If you drop-ship, look to partner with manufacturers. Here, in exchange for promoting their brands, vendors may ship items direct to the consumer for free from their own warehouses.
3. Consider offering free shipping as an affinity program, extending it to your best customers or e-mail subscribers.
4. Offer free shipping only above a certain minimum purchase threshold. This encourages new and repeat customers to build larger baskets.

The decision to offer shipping promotions to select customers, on select products, above a certain minimum purchase threshold or not at all depends on a variety of factors, including your product mix and margin, your fulfillment methods, your shipping carrier relationships, and your competitors' prices.

Some retailers view free shipping as a strong holiday marketing strategy; however, they will reallocate budget from other areas to absorb the shipping costs.

Get mileage out of free-shipping offers
If you decide to offer free shipping, it's important the message gets through at every marketing touch point, from search engine to shopping cart. Here are some examples of where to place your free shipping message:

• Meta tags and descriptions. Henderson, Nev.-based online shoe retailer Zappos.com appends its title tags with the phrase "Free Shipping Both Ways & 365-Day Return Policy." These can positively impact clickthrough rates from search engine result pages -- even when Zappos.com is not the first result. Some of its meta description tags also include the offer, reinforcing the incentive.
• Search ads. Including your offer in your search ad headlines and body copy can help improve your clickthrough rates.
• E-mail marketing. Test free-shipping calls to action in e-mail subject lines, but always repeat the offer in your e-mail creative and landing page. Examples from this summer include eBags' "Pain at the Pump? Stay Put. We'll ship it to you for Free" and Macy's "Gas prices got you down? This week clearance items ship for only 99¢."
• Data feeds. Some comparison-shopping engines like Shopping.com and PriceGrabber.com allow merchants to include a promotional message on a product-by-product basis. Other engines allow users to select the term "free shipping" from a menu of predetermined promotions. Take advantage of these fields. Your listing may even include a "Free Shipping" icon or appear higher in results when users sort by total cost (inclusive of shipping), depending on the engine.
• Affiliate promotions. If you're offering free shipping for a limited time only, make sure your affiliates are notified in advance, and that all coupon codes work before you post them or send them out.
• Offline advertising. Include your offer in radio ads, postcard marketing or direct mail, and state your restrictions clearly.
• Homepage. Devote significant homepage real estate to the free-shipping offer, including delivery date cutoff times as the holidays draw nearer, in addition to banners at the top of each individual Web page.
• Category pages. Endless.com, an online shoe and handbag store operated by Seattle-based Amazon.com, shows "Free Overnight Shipping" below each product thumbnail and price on its category pages. This helps communicate the value proposition to visitors who land on category pages through search and ignore the banners on your site.
• Product pages. Mentioning a product's free shipping eligibility on the product page (near the price or "add to cart" button) also is useful, for the same reasons as noted above.
• Shopping cart. If you offer free shipping above a threshold, use a "carrot" that reminds customers "You're only $X away from free shipping!" and a "continue shopping" link. Most online retailers who offer free shipping above a certain cart total don't do this.

Ponder the variables
Like all marketing and advertising campaigns, with free shipping offers you have to test the waters and be willing to learn from the experience. If you're not ready to dive in headfirst, you may dip your toe by setting restrictions to your offer -- who qualifies, on which items and for how large a purchase.

Costs can be controlled through negotiation and shopping around, but sometimes the lowest price isn't the best value. And simply having an offer isn't enough -- it must be communicated off your site to attract customers, and on your site to convert them.

Linda Bustos is an e-commerce analyst for Elastic Path Software, a Vancouver, British Columbia-based e-commerce software vendor. Reach Linda at
linda.bustos@elasticpath.com.