To Free Ship or Not: Top Tips for Developing a Shipping Strategy for Your Online Jewelry Store
Published on: July 22, 2019
Last updated: November 13, 2020
- How Does Free Shipping Benefit Your Online Jewelry Store?
- Top Tips for Developing a Shipping Strategy for Your Online Jewelry Store
- 1. Analyze your Order History to determine the origin of orders
- 2. Set a minimum purchase threshold
- 3. Incorporate the shipping price into the cost of your jewelry products
- 4. Study your rivals
- 5. Test consistently and thoroughly
- It’s All a Mind Game!
Offering international delivery services could be the boost your online jewelry store needs, but what if you couldn’t afford to offer free shipping?
According to the latest survey by Baymard Institute, 2 out of 3 online shoppers abandon their cart for several reasons. This is such an abysmal statistic, especially if you find out that sitting atop those reasons is extra cost like shipping fee (55%).
However, this doesn’t necessarily mean that all shoppers would evade your online jewelry store like how jewelry connoisseurs distance themselves from fake jewelry pieces. While online shoppers value free delivery and free return shipping, the 2018 Global Consumer Insights Survey revealed that 88% of shoppers were willing to pay for reliable and faster delivery services or same-day deliveries.
Now that is a sweet spot because although some would abandon their carts; others would be willing to pay more for convenience, especially if they liked your product so much they couldn’t wait for it to arrive. The challenge here is to manage those expectations profitably. Despite this willingness, online retailers, regardless of the products being sold, are facing increasing pressure to deliver excellent service at a lower cost if not for free.
The competition influenced by delivery expectations is fiercer because other online stores can offer free delivery to international destinations. How they do that remains to be explored, but there are many tips that can be tried to solve those delivery challenges.
Read below for a quick guide on whether you should or should not offer free shipping as an online jewelry store. Scroll further for more ponderings when developing a shipping strategy.
How Does Free Shipping Benefit Your Online Jewelry Store?
Free shipping has an obvious benefit to online shoppers, but how does it impact your online jewelry store? Some of the benefits listed below could alter the level of your competition; thus, strategize carefully before you decide to offer it to avoid reversing its supposed impact.
- Short-term sales growth
Free shipping brings an immediate effect to your sales. Induced by this offering, your order value would likely increase, especially if you set a minimum purchase threshold to qualify for free shipping.
For instance, if your fashion jewelry store has a minimum purchase threshold of $200, an online shopper who would buy a $150 necklace would be more encouraged to add another item worth $50 to qualify for free shipping; hence, your average order value increases. This is the top action taken by 48% of US online shoppers to get their orders delivered for free.
- A leveled playing field
Offering free shipping when your competitors are already offering it levels the playing field. It makes you stay competitive. However, leveling the playing field this way requires competitor analysis. Do it and do it well.
- Repeat business
Some online shoppers would prefer buying from an online jewelry store that offers free shipping. As such, enabling free shipping could lead to repeat purchases. Additionally, selling to repeat buyers is far easier than convincing new buyers to come and buy. The latter would also cost you more. In the long run, your repeat business could result in customer loyalty.
Compounding all benefits mentioned above, you can say that offering free shipping could increase your profitability if you ace all three. On the other hand, it doesn’t mean that free shipping is just about sparkles, glitters, and happy customers; it can also have its downsides that could prevent you from offering it. These could be any of the following:
less cost-effective if most of your sales are outside your country of origin
an additional expense to meet web IT requirement
Does it get you thinking? Don’t let these downsides discourage you and push you away from what could be a pool of potential online shoppers. Consider the tips below to find out if free shipping is beneficial to your online jewelry store.
Top Tips for Developing a Shipping Strategy for Your Online Jewelry Store
1. Analyze your Order History to determine the origin of orders
The first step to take when considering free shipping option is to determine where most of your orders are coming from. To do this, go to your order history and download the CSV file (if you can) so you can easily sort the list. This way it wouldn’t be too time-consuming. If you’re in the USA and a large portion of your orders comes from the USA, it may be reasonable to offer free shipping.
If you want to offer free shipping internationally, it may be less cost-effective, as mentioned above, especially that there would be more charges to consider like custom fees and other taxes. Make sure that you set the expectations of your online shoppers in terms of who will shoulder those fees to avoid surprises leading to customer dissatisfaction. As such, it’s not uncommon to find online jewelry stores that provide free shipping to online shoppers in the sellers’ country of origin only.
When offering free shipping, don’t forget to weigh in the type, size, weight, and value of the products to be shipped. If you’re on e-commerce platforms like Etsy, you might feel pressured to offer free shipping to ensure that your products are still searchable. This doesn’t mean that you’d totally be removed from the Etsy search results, but it was made clear that it’s pushing for free delivery. As mentioned here, 20% of Etsy shoppers are more likely to checkout completely if the product is marked with free shipping. Furthermore, Etsy will give priority placement to shops and products that offer it starting on July 30, 2019; hence, check what’s at stake if you’re on a platform like this but do not have the business power to offer free delivery.
2. Set a minimum purchase threshold
As stated at the outset, US online shoppers are willing to spend more to qualify for free shipping. This is congruous to Deloitte’s 33rd annual Holiday Survey where it revealed that 66% of polled shoppers were willing to buy items that qualified for free shipping. The same is true for Etsy shoppers who wouldn’t mind spending more to get their orders shipped free of charge.
To do this, you must set a minimum purchase threshold. For instance, you can offer free delivery for orders over $250 similar to what Charriol, a Swiss manufacturer of luxury watches and jewelry, does. See below.
When setting your shipping threshold, ensure that your number is set accurately to avoid destroying your margins. One of the formulas you can follow is demonstrated below. Calculate your average order value (AOV) and subtract this from your proposed minimum cart value (PMCV). Once you found the difference, multiply it to your gross profit margin (GPM) and deduct your average shipping cost (ASC). Most delivery thresholds are commonly set in figures ending in 0, 5, or 9.
$250 (AOV) – $50 (PMCV) = $200*.40 (GPM) = $80 – $20 (ASC) = $60 MINIMUM SHIPPING THRESHOLD.
There are many formulas you can test to make your shipping threshold as refined as possible. You can either choose to offer free shipping by product (for instance, free shipping on all earring orders) or free delivery to frequent or repeat buyers. Do an A/B test if you must, adjust your determined shipping threshold, if you want, and then collect the data and compare. Don’t make the threshold too low or too high; otherwise, your online shoppers won’t be motivated to qualify for free shipping or they won’t be that willing to spend more to reach it.
Whatever route you take, make your online shoppers feel that they are getting an added value from your free delivery promotion, and do it without hurting your online jewelry store.
3. Incorporate the shipping price into the cost of your jewelry products
While this may not be your favorite route, learn to build the shipping price into the cost of your jewelry products, so that your online shoppers need not absorb all of the shipping cost upfront. Other retailers opposed this option because they feel that they are deceiving the shoppers by offering free shipping when it is not actually free. However, online shoppers are aware that no delivery service or shipping company would ship packages for free. It’s an inevitable cost, in this case, so you must consider it when pricing your item.
The key here is to develop a strategy that makes you come up with a final price that is acceptable to the online shoppers — one that adds value to or benefits them without you killing your business.
When following this route, always conduct thorough industry research to guarantee a competitive product price.
4. Study your rivals
Look around and find out what your competitors are doing. Read their shipping policies and make your decision based on that analysis. This will somehow give you a peek at what online shoppers are expecting from a business like yours.
Are your competitors offering free shipping? What are their minimum shipping thresholds? Do you think that they incorporate the shipping cost into the price of their jewelry products? How about their international shipping? Do they charge extra for same-day or next-day domestic delivery, similar to how Tiffany & Co., as shown below, arranges it?
If most of your competitors are offering free shipping, you’re at a disadvantage. Similarly, if they are offering free delivery for orders above $60, setting your minimum purchase threshold at $120 will likely not entice your online shoppers. Remember to stay competitive.
5. Test consistently and thoroughly
Before officializing your shipping promotion, test consistently and thoroughly to ensure that your numbers are right and that the results are showing a boost to your conversion rate.
Test the promotion for a few weeks and gather all the data, so you can analyze the outcome and assess whether your shipping strategy is the best strategy for your online jewelry store. If the outcome disappoints you, don’t hesitate to adjust and make some tweakings until you find the right formula.
It’s All a Mind Game!
The power of the term “free shipping” cannot be disregarded. It affects shoppers psychologically and alters their behavior to the point that they’ll do anything in their capacity to avoid that fee. They know that nothing is truly free, especially when shopping online. There’s just no way around it. But why does free shipping keep attracting them?
The most important thing here is to be transparent to them. Free shipping gives them the feeling that they are in control — that they have a sense of choice —that is – pay the shipping fee or add more items to qualify for free shipping. Once they see the shipping fee itemized before they check out, the joy of shopping escapes their body and starts to feel the pain, which leads to cart abandonment.
For the benefit of your online jewelry store, don’t take that power away from them.
It’s all a mind game; win it!