Australians are no different than the rest of the world when it comes to expecting great offers while shopping online. These offers serve as a definitive push to complete an order.
Online free shipping in Australia is one such strategy that can be the biggest motivation for shoppers and a game changer for businesses.
According to a 2022 study on Australia's eCommerce landscape, the primary driver for eCommerce purchases among 60.6% of online shoppers between the ages of 16-64 years was free delivery.
Why should you offer free shipping?
Shoppers love free delivery but it is also a powerful move from your business point of view. Let us understand why free shipping would work wonders for you.
A powerful tool to attract and retain customers
The allure of anything free is deeply ingrained in consumer psychology. It triggers a feeling that the product is more attractive and leads to cost savings.
Free shipping online in Australia has the potential to not only attract new customers but also retain customers and motivate them to return.
Sets a competitive edge
By offering free shipping online in Australia, you can set yourself apart from other competitors. The eCommerce space is crowded and by offering free shipping, you can attract those consumers who are in a double mind between your product and a competitor which is offering paid shipping.
Increases your average order value
To qualify for free shipping, the shoppers will likely increase their cart value. This will lead to larger transactions and increase your Average Order Value (AOV).
Positive word-of-mouth
Customers who get free delivery perceive the shopping experience to be positive. Satisfied customers are more likely to spread a positive-word-of-mouth about your product.
Considerations for offering online free shipping to Australia
No matter how enticing, it can be a challenging task for businesses to offer free shipping without considering the financial, logistical, and other operational aspects.
Here are some things you need to keep in mind before going ahead with free shipping:
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Keep adjusting your pricing strategy and shipping policies with changing growth milestones
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Also, take into consideration return shipping costs. Customers are likely to return items and expect businesses to pay for free return shipping costs.
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Find out whether your customers prefer free or fast delivery. If they prefer free delivery, they will not mind waiting a couple of days for delivery. If they prefer fast delivery, you can charge shipping costs.
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Consider the marketing, advertising and IT costs to promote free shipping. You may also need to resort to paid advertisements on social media platforms and search engines.
10 ways and tips to offer online free shipping
There are various ways by which you can offer online free shipping in Australia and yet stay profitable.
1. Calculate your margins
The first step before deciding to offer free shipping is to calculate your profit margins and the shipping cost. It may be difficult to calculate for every potential order but a general sense can be made by looking at your AOV and the cost to ship the most common products.
The size of the product also is critical. If you are shipping large and heavy items, free shipping most likely will not be feasible. For normal and smaller packages, you can decide to offer free shipping based on your margin calculation.
2. Free shipping on all orders
The easiest way is to offer free shipping online on all orders irrespective of how much the customers spend or how many items they buy.
This strategy works best for businesses that offer all products with a high profit margin and can afford free shipping on all orders. It also makes sense for items that do not weigh much or are relatively small in dimension. Â
You can also offer free shipping on all orders with a low-cost shipping option which takes more time to deliver. At checkout, you can provide an option to customers to upgrade to faster delivery by paying for shipping.
Example - The Australian fashion and Lifestyle Company, ‘The Iconic’ offers free standard delivery and if customers wish express delivery, they can avail it at a cost.
3. Free shipping on selected products
Free shipping online on selected products works when it does not make sense financially to offer free shipping on all products. Shipping costs vary for different items and depend on factors such as size, weight, and destination.
You can offer free shipping on selected products that have low shipping costs and higher markup to maintain profitability after factoring in shipping costs. Â
4. Free shipping based on geographical locationÂ
Australia is geographically vast and diverse and shipping costs may vary significantly. It is advisable to offer free shipping selectively based on the shipping destination.
You can divide the country into different zones and regions and set different threshold shipping rates for each. For instance, the threshold for orders in major cities can be lesser compared to the free shipping threshold in remote and rural areas.
Another tip is to store your inventory closer to your customers. It will ensure faster delivery and free shipping. However, you need to keep in mind that it may increase your storage costs. This is advisable only if the carrier and shipping costs offset the storage costs.
5. Spend more – get free shipping
You can set a minimum purchase amount as the threshold to offer online free shipping. It is important to calculate the right threshold value. Too high a value will deter the customers from completing the purchase and too low a value will eat into your profitability.
It is ideal to set the threshold level just above your AOV or MOV (Median Order Value). You can calculate your zero-loss shipping threshold, by using the below formula;
Free Shipping Threshold = (Average Shipping Cost / Gross Profit Margin) + Average Order Value   Â
Setting a threshold value will encourage the customer to spend more. The more the customer spends; the more discount they get along with free shipping. You can offer a two-for-one deal and free shipping as an extra incentive.
Example – The shoe manufacturer and retailer 'Brooks' offers free shipping Australia-wide on all orders above $50.
6. Limited-time offer on free shipping
For products on which you cannot offer free shipping online in Australia throughout the year, a limited-time offer on free shipping is a great strategy. It creates a sense of urgency in customers and is a proven strategy that increases sales by manifold.
Special holidays and occasions can be leveraged to offer limited-time free shipping promotions. Plan promotions around major shopping events such as Christmas, Black Friday, Cyber Monday, and other holidays.
You can also offer limited-time free shipping during sluggish sale periods to clear your older inventory.Â
Promotion on your social media platforms and email marketing are effective ways to communicate free shipping promotions.
7. Incorporate into your pricing strategy
One of the easiest ways to offer free shipping in Australia is to incorporate shipping costs into the price of the offering. This will enable you to offer free shipping on every item and increase the chance that the customer completes their online purchase.
It is advisable to calculate your profit margin to ensure free shipping does not cut into the profits. You also need to check what your competitors are doing and that it is not an international order.
8. Optimize your packaging and shipping costs
A very effective way to reduce your shipping cost is to optimize the weight of your package and the shipping methods.
Depending on the type of item, you can customize your packaging. For delicate and fragile items, you might need stronger packaging which helps to protect the item against any damage. But for sturdy items such as clothing, lightweight and less expensive packaging will aptly do.
To optimise the shipping cost, research shipping options available and negotiate rates with multiple carriers to find the most optimised solution for your delivery management.
9. Offer membership and loyalty programs
Use free shipping as an incentive to make customers sign up for memberships, loyalty programs, and newsletters. It can also be used to nudge customers to create an account or sign up for a store credit.
You can offer a tiered loyalty program where customers earn points for each purchase and upon reaching a certain threshold; they can unlock free shipping benefits.
Example – The eCommerce giant Amazon offers online free shipping in Australia on subscriptions to its Prime membership.
10. Free shipping for first-time customers
Acquiring new customers is much more challenging than getting existing customers to return. Online shoppers remain on the lookout for best online stores with free shipping to Australia. Offering free shipping is an excellent tactic to attract new customers and to get them to make a purchase.Â
You can create a discount code for new customers making a purchase. They can avail of free shipping by using the discount code.
Summing Up
Free shipping has become a must-have for online shoppers. Businesses are also riding on this wave to encourage shoppers to convert their purchase interest into action, leading to new customers, increased AOV, and enhanced customer satisfaction.
The 10 ways discussed above will help you to deliberate on how to profitably offer online free shipping in Australia based on your product and business dynamics.
Partnering with a suitable courier shipping company is crucial to achieve profitability. You can get in touch with us to get lucrative deals on shipping services.