Shipping fees are a huge turnoff for consumers. In fact, researchers from North Carolina State University and Texas A&M University found that 50% of customers abandon items in their online shopping cart because of high shipping costs. Furthermore, shipping fees cause $18 billion annually in revenue losses for e-commerce retailers.
Many online brands offer membership-based free shipping (MFS). An MFS program gives consumers free shipping on certain items in exchange for an upfront membership fee that they pay. Not only can this strategy reduce cart abandonment and a loss in revenue, it can also improve customer loyalty and increase revenue.
The membership fee customers pay may offset the rise in shipping costs and result in higher revenue over time.
While an MFS member might not purchase more of your products right away, there’s a good chance they will eventually. At first, they might make smaller, more frequent purchases.
Unfortunately, these frequent purchases can result in higher shipping costs without providing an immediate boost in revenue. The good news, however, is the membership fee customers pay may offset the rise in shipping costs and result in higher revenue over time.
If you decide to implement an MFS program, keep the following tips in mind.
- Target light buyers who typically pay shipping fees or purchase from broad product categories. These consumers may consolidate their spending after they enroll in your MFS program and won’t exploit the free shipping benefit with smaller orders.
- Don’t promote your program to heavy buyers. Consumers who purchase a lot of your goods frequently are unlikely to pay for shipping or purchase from limited product categories. If you do target these consumers, you could lose a lot of money in the long run.
Whether or not a free shipping subscription makes sense for your business depends on your unique target audience, risk tolerance, and goals. If you’re an online retailer with many light buyers, it may be worth a shot.
Read More: [How to Choose E-commerce Shipping Software]
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