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- Ecommerce Shipping: Your Step-by-Step Guide to Shipping Profitability
If you don’t offer free shipping from your online store then you’re missing out on a substantial amount of revenue. While you might initially think that offering free shipping will erode most or even all of the profit in the order, I can tell you that it wont — if you use a simple strategy.
Using free shipping as a motivator for customers to buy from you can help increase your average order value by up to 30% in just a few short months. You simply need to work out your average order value and average shipping cost, and then offer free shipping on your average order value + 10%, or whichever amount covers your average shipping cost and provides enough of a profit to slightly increase your average order value.
If you repeat this process every 3-4 weeks, your average order value will increase by 30% or more in just a few months. The basic idea here is that a certain percentage of your customers will be willing to spend more with you on each transaction in order to “trigger” the free shipping option you setup. This creates a win-win situation: your customers get free shipping and you increase your average order value resulting in a better bottom line for your business.
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