Shipping costs make the difference between a conversion and cart abandonment.

In fact, according to Shopify, the leading cause of cart abandonment is because “shipping and handling costs were too high.”

Alleviating the top reason for abandonment with your customer base is the first step in driving business. But how? We have a few ideas you might want to consider.

Shopping Cart Abandonment

The Leading Causes of Shopping Cart Abandonment. Source: North American Technographics

Free Shipping & Cart Abandonment 

No matter who you are or what kind of business you run, I can promise you this: your customers love free shipping. Your customer base wants to pay for the product, not the parcel.

Think of it as trying to feed a skittish squirrel; your inventory is your peanut and your low prices are your calm demeanor… metaphorically speaking. Now if you start waving your arms all around and screaming at the poor woodland creature– yelling about feeding him peanuts– not only might you get arrested, you’re going to scare off any potential for making a squirrel friend. This is the equivalent of charging high shipping costs and the consequential cart abandonment. The squirrel abandoned you.

And this psychology behind this cart abandonment stems from sticker shock.

We’ve seen it all before… when a potential customer sees the price of your product, that’s the actual figure they decided to spend at that point. When they’re ready to checkout, the sales tax is already annoying them. Then adding the shipping costs lead to the abandoned cart and they bounce.

When you advertise free shipping, not only do you win the hearts of your loyal customers with your awesome product, there is no shipment sticker shock. The only additional price is the sales tax, which they know is inevitable.

It actually really should be called “no additional charge for shipping,” but that’s not very catchy. That’s because the smart ones already include the cost of shipping into the cost of the product. That is, the cost of shipping is already absorbed into your retail price. So advertising your free shipping is the key to turning a lead into a conversion.

Did you think advertising free shipping meant you had to foot the bill? C’mon now!

Tiered Free Shipping & Cart Abandonment 

Now ‘free shipping’ isn’t a magic bullet and, in the end, does drive up your prices.

In one way or another advertising free shipping cuts into your profit margin. So it may not be realistic to offer for many small businesses. So another solution may be to consider providing free or discounted shipping at certain price points.

This strategy allows you to absorb your costs with a higher profit margin. For simplicity’s sake, let’s say you have a fixed profit margin across all your inventory of $20 on each item. Likewise, let’s assume they all cost the same $5 to ship to your market. You can incentivize your target market with free shipping when they buy 3 items for a profit of $45 rather than $60.

This is a win-win scenario. You make less profit than if they were to buy three without the incentive but more of a margin than if they bought 2. This makes it worth your while to absorb the shipping costs. Not only are you able to encourage your target market to buy more of your inventory, but they also enjoy free or discounted shipping.

Third-Party Discount Shipping Service

There’s a lot of benefit to utilizing third party shipping services. These services provide benefits and service management at discounted rates. So not only do they take care of all of these retention strategies for you, they have programs designed to save you both time and money.

Third-party shipping services, such as ShipTime, provide programs to provide added incentive for association membership. These memberships help you drive new members and improve retention with a complete solution for your membership base.

These turn-key, fully supported incentive programs include such benefits as preferred member discounts on express courier and LTL shipping along with special loyalty programs. With association partnerships with CFIB (Canadian Federation of Independent Business) and Costco Canada, they take care of all the details and make you look good.

One way or another, keeping this low is your ticket to sales growth. But taking out the leg work and shipping through a third party vendor alleviates the stress so you can focus on growing your business. Taking the haggle out of finding the lowest price in a shipping provider saves you time and money. work in conjunction with express courier providers and special loyalty programs.

Learn more here.