Ten E-Commerce Facts & Stats

1. 80% of Americans with internet access have made an online purchase in the last month.

2. Millennials and Gen Xers spend 6 hours per week shopping online; Baby Boomers spend 4,              and Seniors 2.5 hours.

3. Parents spend more of their shopping budget online compared to non-parents (40% vs.                    34%) and spend more time shopping online per week (7 hours vs. 4 hours).

4. Last year, men spent 28% more money online than women.

5. Americans in metropolitan areas spend more money online than suburbanites or rural                        customers.

6. Shoppers on third-party marketplaces spend more time searching and also spend more                      money per-purchase than those who visit branded stores.

7. The top three factors in determining where Americans shop are price (87%), shipping cost                and speed (80%) and discount offers (71%).

8. 30% of online shoppers say they are likely to make a purchase via a social media network                  like Facebook or Pinterest.

9. 55% of e-commerce sales are done through branded stores vs. 45% through third-party                    marketplaces.

10. 43% of online shoppers have made a purchase while lying in bed.

The Truth Behind Free Shipping

In 2017 Amazon spent $21.7 billion on shipping costs, nearly double the amount from two years ago. That is $21.7 billion in losses, since Amazon doesn’t charge for most shipping. One hundred million items qualify for free two-day shipping now compared to only 20 million in 2014.  The company’s bet, of course, is that by offering free shipping to customers they will become addicted to the convenience and spend more. But do the increased sales make up for the shipping losses?

Probably not, which is why Amazon recently announced the cost of a Prime membership would rise by 20% effective May 11. In addition to raising the cost of a Prime membership, Amazon is also raising seller fees in certain high-volume categories such as apparel and books.

There’s no such thing as a free lunch. Costs have to be absorbed somewhere, either through lower margins or by investor subsidies, which has been Amazon’s strategy for most of its existence.

In business, there are fixed costs, defined as costs that remain basically the same no matter how much a company sells, and then there are variable costs, which rise and fall with sales. Shipping is a variable cost and therefore a price factor in every purchase. Some analysts expect shipping costs to increase by 7% per year going forward, a variable cost that will have to be absorbed either by e-commerce sellers or their customers.

The secret sauce to e-commerce may ultimately turn out to be convenience over price as the competitive landscape finds its natural level. Brick-and-mortar rents are falling, for example, while e-commerce shipping rates are rising, which may start returning some leverage back to the brick-and-mortar business model.

Some analysts say that the supply-chain cost to retailers for direct-to-home sales is three times that of an in-store purchase, yet customers don’t pay three times as much to have items delivered to them. In fact, they often they pay less, with the difference in cost being absorbed by the retailer. How long will that continue?

Amazon Prime membership fees only recover about 55% of the money that Amazon spends on shipping, which is why Amazon recently raised the minimum purchase for free shipping to $49 from $35.

How can smaller e-tailers compete with Amazon as the promise of free shipping bites deeper into margins? One way is to ship through fulfillment 3PLs that receive shipping discounts from the major carriers, reducing shipping costs. Another way is to improve packaging. Shipping costs are determined by weight and dimensions. The weight of the product usually can’t be controlled, but often substantial savings can be found in packaging variables.

Another strategy is to create a sales niche or buyer-community that is loyal to your product. Then the e-tailer can charge more and cover the costs of increased shipping.

Whichever route one chooses, shipping costs will play an increasingly important role in retail decisions going forward.

Walmart -- The Sleeping E-Commerce Giant

Walmart is a sleeping giant in the world of e-commerce. Despite double-digit growth in recent years, its e-commerce business is still less than one-quarter of Amazon’s. The giant is waking up, however, now offering two-day free shipping without a membership fee (there will be no Walmart Prime) and introducing a cleaner and more modern e-commerce website.

In addition to better photography, newer fonts, and more color, the revised site will include specialty shopping experiences, such as fashion, beauty, and groceries and feature a more personalized and local angle, like alerting customers to fast-selling items in their area.

Consumer spending habits are changing in ways that might help Walmart. Rather than buying in bulk once-per-month (the Costco model), people are starting to purchase more frequently and in smaller quantities, using physical stores to browse before going home and buying online. This is bad news for Costco but good for Walmart, which doesn’t care if you purchase from one of its stores or its website.

Amazon understands this spending-habit change and is building its own brick-and-mortar footprint (Whole Foods, Amazon Go, Amazon Books), but that will be a laborious and expensive process if it wants to match Walmart, which already has 11,000-plus physical stores.

In a sense, Amazon and Walmart each have what the other one needs, and so, barring a highly unlikely merger, it will be a race to see which one can put together the most effective omnichannel strategy consisting of in-store sales, online sales, pickup and delivery.

Informed Delivery

Is Snail Mail about to turn into Cool Mail? The USPS’s new service, Informed Delivery, will email you images of every piece of mail you’re scheduled to receive that day. Wondering whether or not to wander down to your apartment building’s mail box? Check Informed Delivery first and see if anything interesting is scheduled to arrive. Expecting a check or maybe hoping to avoid a summons? Informed Delivery will let you know.

This could be a boon to marketers when the USPS takes the next step and includes clickable links with the images. Imagine launching a direct mail campaign with the ability to track the clicks, just like with digital. Imagine being a customer, seeing an image in the morning with a clickable link leading straight to purchase, and then receiving the physical mail later that day. Then there’s the added benefit for marketers of knowing that the consumer actually received the physical mail and probably looked at it, unlike email marketing where many — if not most — messages languish in spam folders.

It’s an opt-in service and entirely free. Currently Informed Delivery only shows images of envelopes but not packages or magazines. However, the service does give a status update of packages and allows for special delivery instructions. The USPS plans to include packages and magazines in the next phase of Informed Delivery.

Click here for more information about Informed Delivery.

Selling on Walmart.com -- A Guide

Walmart, the Amazon of its day, is putting everything it has into competing with the e-commerce giant, including letting third-party sellers appear on its website. Walmart.com doesn't accept everybody, however. There are standards to be met before a third-party seller can post products on the site,  including:

- strong customer service

- unique product assortment

- competitive pricing

- fast and reliable fulfillment.

To apply, sellers log onto https://marketplace.walmart.com/apply and fill out detailed company information along with product details and warehouse/fulfillment capabilities.  If accepted, Walmart sends an email allowing sellers to begin the setup process.

Here are some advantages to selling on Walmart.com versus Amazon:

- No setup or monthly fees

-  Less competition

- A voice-based partnership with Google.

 

Here are some disadvantages:

- The approval process can take weeks.

- Walmart tends to favor known brands over small sellers.

- Buyers of premium products often view Walmart as down-market and might not think to go on its e-commerce site to buy a higher-end product. 

The Curse of the Corrugated

These are salad days for corrugated-box manufacturers, especially with e-commerce requiring outer shipping boxes for almost every shipment. Meanwhile, acres of discarded boxes are recycled or thrown away each day.

Because of this, the packaging industry is ripe for disruption. Currently, products are packaged to enhance their shelf-appeal in stores rather than for shipping, yet brick-and-mortar continues to lose market share to e-commerce.

So where is the disruption opportunity? In the packaging production lines, which need to be retooled so that products can be packaged in ready-to-go shipping boxes, thus avoiding the need to repackage them in larger  boxes at time of shipment.

The Rise of M-Commerce

M-commerce (M stands for mobile) is trending. Its biggest hurdle to date has been an uneven integration with online shopping carts, primarily because of three factors:

1. Small mobile-phone screen size

2. Speed

3. Payment security

Smartphone manufacturers have addressed the first issue by creating larger screens. Meanwhile, cellular connections continue to improve, with upcoming 5G wireless technology promising to speed things up even more. Social media sites have helped out by offering Buy buttons, which transport customers seamlessly from browsing-to-purchase and reduce the fear of sharing credit-card information via phone.

The results are startling. Money spent per mobile visit to online retailers has increased by 27% since 2015, almost as big of a jump as tablet and desktop sales combined, while the length of time spent during the purchasing process has declined by 10%, meaning that the mobile shopping experience is becoming more streamlined.

Meanwhile, overall mobile  visits have skyrocketed. Since 2015 there has been a 90% increase in smartphone visits to websites, while traffic from tablets and desktops has actually declined.

The growth in sales is phenomenal — m-commerce revenues are expected to increase from $30 billion in 2014 to $284 billion by 2020.

Physical distances are shrinking also. You can log into e-commerce websites from almost anywhere, purchase from a seller  who is located almost anywhere, and expect to have your purchase delivered in a matter of days.

Now that's service.

Our Top Ten E-Commerce Checklist

Here is a handy checklist of critical elements for e-commerce  success:

 

1) Get Good at Social Media

The social-media universe is virtually infinite, and so it’s a challenge to find the best way to use it. Dabbling in all available social-media platforms is fine, but we recommend picking one  and mastering it, with this objective -- creating an environment where customers can  exchange information, and where you can post announcements.

 

2) Minimize Shopping Cart Abandonment

Approximately 60-70% of online customers abandon their shopping carts before making a purchase. The main cause is often additional fees that get tacked on at the end of the sale, such as shipping charges. Try to announce ancillary fees at the beginning of the process so customers aren’t surprised at the end. Another important strategy is to send a follow-up email to customers if they abandon their shopping cart. There are many automated email programs that can do this for you.

 

3) Up-Sell and Cross-Sell

Let’s say a customer is ready to buy one of your products. This is the perfect time to sell them something else, either additional items that enhance the usefulness of your product (such as shaving cream specifically formulated to work best with a particular razor), or combining items to allow the customer to achieve a volume discount. Another strategy is to offer an inexpensive entry-level sale.  A good example of this was employed by Sam Walton, founder of Wal-Mart, who sold ice-cream at cost in front of his first brick-and-mortar store, attracting customers with the low price and then ushering them in to make more purchases.

 

4) Leverage a 3PL

If you start small, you might want to try fulfilling and shipping your product yourself, but third-party logistics companies (3PLs) can usually handle this function better and cheaper than you, once volume and order-complexity levels have been reached. 

 

5) Offer Free Shipping

Everybody likes free shipping, and you need to offer it, though you probably aren’t in a position to emulate Amazon and lose $20 billion dollars a year on it. Instead do the next best thing and offer free shipping at a minimum purchase-price point, encouraging customers to buy more.

 

6) Get Your Mobile Capabilities Up to Speed

Sixty-two percent of smartphone owners made a purchase via mobile in the past six months. Mobile usage is growing faster than any other communications segment. Your mobile site should be user-friendly, with an easy-to-navigate shopping-cart function.

 

7) Outsource, Outsource, Outsource

Good leaders keep their eyes on the big picture, which means staying out of the weeds. Entrepreneurs and small-business owners often feel the need to do everything themselves, and while it’s good to understand the details of your operation, trying to do everything  is ultimately a loser. Pick an area where you feel most skilled (sales and marketing are good) and outsource as much of the rest as possible.

 

8) Create Original Content

Recipes, blogs, newsletters - there are many ways to keep a flow of information going to your customers and prospects. Tilt your content toward  information more than sales. People like content that teaches them something.

 

9) Get Customer Feedback

Your customers are your best critics, and their feedback is a gold mine of information. Many e-commerce platforms have plugins that allow you to collect and display customer reviews. If that isn’t available, there are other apps that allow you to integrate customer testimonials into your product page.

 

10) Connect With Affiliates

Affiliates are associates (such as bloggers) who refer customers to your website and then collect a commission on the sales. This serves as free marketing for you. There are reputable networks that make it easy for affiliates to integrate with you. Be generous with your commissions because this is one of the more efficient marketing tools available.

 

Are Voice Assistants Going To Be Your New Best Friend?

This holiday season  Amazon and Google  pushed hard to market their respective virtual voice assistants -- Amazon Echo and Google Home -- which soon may come to dominate  household activity. 

Voice technology has an advantage over other tech innovations because it's easy to use. Simply speak into a device and voice-translation technology seamlessly obeys your command. Customers don't need to master new interfaces. They simply do what they've done their entire lives -- talk.

Voice assistants are embedded into almost every new household appliance  these days as tech companies race to gain a monopoly on the internet-of-things.  In the near future, consumers may be motivated to buy compatible household appliances that are supported by one technology company  so that everything operates on the same system. 

Amazon is even thinking about putting ads into their devices, which means a voice assistant, in addition to taking orders, might also make recommendations, sort of like the guy on the loudspeaker at the grocery store who continuously announces the daily specials.

A potentially creepy factor might also come into play. Digital assistants (Amazon Echo, Siri, the lady in your GPS) already speak to you in soothing tones. What happens when she (and it's always a she) adds Artificial Intelligence (another day-to-day  technology looming on the horizon) to her arsenal? Will she become an ideal companion who changes and adapts to your personality, offering lifestyle advice along with recommending new things to buy?  Will she then become your new best friend?

 

 

 

Are You Ready for Delivery Robots?

The immediate-gratification society is about to get even more immediate when robotic, self-driving vehicles begin traveling the streets 24/7 delivering the stuff we've ordered. The latest entry  is Nuro, a startup that has secured $92 million in financing to build small, driver-less delivery trucks.

Nuro is looking to help solve the Last Mile problem by  delivering cargo and packages into small areas such as city streets.  It is relatively easy to transport cargo over long distances but far more difficult (and expensive) to cover the final leg, the Last Mile.

Nuro believes that self-driving delivery vehicles will be easier to manage than passenger cars. For one, they are only half the size of a sedan and are built specifically for local roads, unlike regular cars that also have to travel on highways. Speed is not a priority with a local-delivery vehicle.

Because it's cheaper to operate, Nuro vehicles might also be able to provide services to local merchants, who normally can't offer local delivery.

Nuro is following on the heels of Aurora Innovations, which has recently partnered with Volkwagen and Hyundia to commercialize self-driving technology. Dozens of other tech  companies are jumping into the market that some people believe will mark as radical a shift in transportation as when the internal combustion engine replaced horses.  

Other car companies are  getting into the act. Ford is  testing a pilot program with Domino's to deliver pizzas in Michigan, and Toyota recently unveiled a concept vehicle called e-Palette that will supply self-driving vehicles to Uber, Amazon and other companies. 

Many experts believe that these self-driving delivery vehicles will achieve success far sooner than self-driving passengers vehicles.

 

 

 

Return to Sender - Ecommerce Division

After the record-setting e-commerce holidays of 2017, retailers are now  managing the inevitable flood of returns, and customer satisfaction depends on it. According to research by Promocodes.com, 63% of shoppers say they will not buy again from a retailer who gives them a negative returns experience. 

Returns policies affect even first-time buyers, with 51% responding that they tend to avoid shopping with retailers who have strict returns  policies.

Here is is what shoppers want -- a full refund for a returned purchase with no questions asked.

 

 

Optimizing E-Commerce Conversions

The customer journey through the e-commerce shopping experience mirrors a brick-and-mortar visit, except that each step is digital instead of physical.

People enter your site and browse, just like do in a physical store. And just like in a physical store, products in the digital store should be as appealingly displayed as possible.

Sales associates help facilitate sales in physical stores. For e-commerce sites, the product page is the sales associate, and therefore the product page must be equipped with all of the necessary information to help the customer make a decision to buy your product.

The final step in the journey is the transaction, which at a physical store happens at the cash register. This is where e-commerce sites encounter their biggest problem. Very few customers walk away from brick-and-mortar transactions once they reach the cash-register line, but almost 70% of e-commerce traffic drops out during the shopping-cart process.

Why? The major culprit is shipping, with options and costs often not revealed until the very end. The best way to overcome this obstacle is to advertise shipping costs at the beginning, if they are fixed (free helps).  If other shipping options are there to choose from, provide clearly-defined delivery dates and costs as early in the process as possible.

Shipping Expectations in the Age of Amazon

Jeff Bezos, with a relentless focus on innovation, efficiency, and quality, drives the e-commerce world, and everyone else who wants to succeed needs to learn how to flourish in the ecosystem he has largely created.

Shipping is one area where Amazon's gravitational pull  defines the landscape. An expectation with consumers has been created of cheap (if not free) shipping and speedy delivery, though surveys show that most customers prefer low cost over speed. 

Most e-commerce companies can't afford to give away the shipping. They need a certain level of purchase before they can offer it, but whatever your free-shipping rules, make sure they are prominently displayed on your website. One of the biggest causes of shopping-cart abandonment is  customers not finding out about  delivery options until the checkout phase. So advertise your options early in the process, and if there is a free-shipping one, make a big deal out of it.

Does everybody  have to match Amazon's free two-day shipping policy (though it's not really free)? The answer is, sometimes, but not always. It depends on the product. Niche products have more shipping leeway because they are perceived to be special, while everyday household products are held to a different standard   because a behemoth like Amazon can easily stock and sell them.

So what is the best strategy for competing with Amazon?

You have a choice -- set up your own operation or find a third-party provider. People who want to spend most of their day managing fulfillment might choose the first option, but keep in mind the expense involved -- a multi-year warehouse lease, equipment purchase, systems development. Figure a million-dollar investment to get up and running, plus ongoing overhead costs (rent, employees, benefits, etc.). And a startup is unlikely to receive favorable shipping discounts from the major carriers until volume is reached.

Third-party providers get you there faster, both because the above-mentioned overhead is already in place and they have existing contracts with the shipping carriers that  provide lower shipping costs.

The key factor with a third-party provider is reliability. Since this provider will house  your inventory,  it must be  rock-solid. Referrals are important here.

To summarize, you can compete with Amazon, especially if you are offering a niche product that can't be reduced to a commodity (like laundry detergent), either by setting up your own fulfillment operation (if you are an operations-oriented person with the the funds to invest) or by leveraging the experience and contracts of a reliable third-party provider who gives you quick turnaround and  less- expensive shipping options.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Retailer of the Year Was Your Smartphone

2017 was the tipping-point year for smartphone shopping.  Almost half of online Black Friday purchases came from smartphones, and increase of more than 15% from last year. Traffic from desktops decreased, making smartphone purchasing the most popular method of ordering online.

The trend continued during Cyber Monday, when 45% of site visits and almost 20% of revenue came from smartphones. This represented a 21% year-over-year increase in site visits and a whopping 41% increase in revenue. And here's another statistic - conversion rates from shoppers buying instead of just browsing increased by 12%, meaning that more people are getting used to converting the purchase on their smartphone.

Why the increase? Because more people own smartphones and have them available at all times. Also, the e-commerce apps have improved. Retailers continue to invest in the mobile shopping experience, streamlining processes, reducing steps, and improving security.

2018 should be an even bigger year for smartphone e-commerce.

 

Improving Inventory Management

 

Inventory management plays an important role — too much inventory creates unsold inventory costs, too little inventory leads to customer dissatisfaction. Here are some important metrics for maintaining manageable inventory levels.  

  1. Inventory Turnover Rate - This measures how many times inventory has been sold and       replaced in a given period of time, either as Cost of Goods Sold divided by Average       Inventory or Sales divided by Inventory
  2. Average Days to Sell Inventory - This measures how long it takes to turn inventory into sales. (Inventory divided by Cost of Sales times 365).

  3. Average On Hand Inventory - To calculate for a given month, add beginning inventory to ending inventory and divide by 2.

  4. Holding Costs - This measures the cost of unsold inventory. To arrive at this number, include damaged inventory along with storage, labor and insurance costs

  5. Out-of-Inventory Costs - This measures the cost of running out of inventory. The calculation is simply one of estimating lost sales due to lack of inventory.

  6.  Overstocking - In order not to run out of inventory, companies need to maintain stock. The question is how much. The metric here is to have the cost of  overstocked goods (including storage charges) be less than the cost of running out of inventory.

  7. Lead Time - Calculate the sum of the time it takes a supplier to deliver product once the order has been placed plus the time that transpires between the need to order again

  8. Returns - This is the percentage of orders that are returned and restocked.

  9. Accurate Order Rate - This metric measures the percentage of orders fulfilled correctly, meaning correct items and quantities with no complaints or follow ups from customers.

     

     

 

Alibaba Sold a Massive $25 Billion Worth of Merchandise in One Day

It's called Singles Day, when single people in China celebrate being single. Created by Chinese university students as sort of an anti-Valentine's day, sales on Singles Day tripled the volume of Black Friday and Cyber Monday combined. 

Alibaba reported that at one point shoppers spent $1 billion  in just 2 minutes.

November 11 is Singles day because the numerical date is represented as 11/11.

Alibaba has used the event to lure international companies onto its platforms. More than 40% of participating brands on Singles Day came from outside China. The massive shopping holiday is also spreading to other Asian countries.

Significantly, Alibaba is using the holiday to help leverage its significant investment in brick-and-mortar stores, promoting Singles Day in the stores as well as online.

The success of this online/offline partnership might presage looming battle between Amazon/Whole Foods and Walmart over grocery delivery.

 

 

 

 

 

 

Amazon Courts Indian Merchants

In the past two years, Amazon has signed  more than 27,000 Indian merchants to sell goods directly on its American site. The program is profitable in both directions. The merchants gain hassle-free access to the American market, avoiding export/import, marketing and distribution costs that go along with international commerce, and Amazon gains a huge influx of third-party sellers who manufacture quality products at a low cost.

Amazon handles everything for the Indian merchants, including  an e-commerce platform, advertising, storage and fulfillment. In return, Amazon takes approximately one-third of every transaction. Since production costs are low in India, this arrangement results in lower prices for U.S. consumers and profits for the merchants. 

Some merchants with contacts in the U.S. work with a hybrid business model, letting Amazon host their products but fulfilling through a U.S. domestic 3PL, resulting in lower costs for the merchant.

 

The 12-Minute Window

 

Marketing agency Tangent Snowball surveyed 1,000 customers and found the average time customers spend browsing a website before placing an order is 12 minutes.  Tangent commissioned the survey  to pinpoint key customer-engagement areas and to develop effective strategies for ushering customers out of the browsing phase and into purchasing.

Here are some of their insights:

Use Personalization to Attract

Data will be the differentiator going forward as marketers learn to decode the massive amount of information available to them. One case study is where Microsoft worked with a bank to determine who was in the market for car loans. Microsoft was able to determine how many searches served as  the tipping point for customers who were  really in the market for a new car rather than just browsing. 

Going after customers with personalized messages who have abandoned their shopping carts is another effective strategy, since more than a quarter of online shoppers prefer to leave a site  before coming back to buy.

There is a split between consumers who like to receive targeted ads based on their previous searches (26%) and those who believe it is an invasion of privacy (22%).  The key to avoiding the invasion-of-privacy trap is to give the customer good information without overdoing it. 

Personalized emails are also effective. Research showed that 42% responded positively when asked if a personalized email affected their decision. That is a  higher number than TV ads (36%) or online advertising (22%), which came in second and third as motivating factors.

Improve the User Experience

Ease of navigation is another important area. One-third of respondents said they bailed out if the  checkout process grew too complicated. Almost a quarter  of customers saw  value in online support.

One-click purchasing and Guest Checkout also improved the shopping experience.

Another sticking point is shipping costs. On many sites  customers only learn about shipping costs at checkout, which creates two problems - 1) customers will advance to the checkout phase just to find out the shipping cost and then leave (increasing the abandonment rate) or they will bail out at checkout because they weren't expecting the extra charge.

Next Steps

The new frontier of e-commerce is changing all the time, and online merchants need to keep abreast of  the latest developments. This requires ongoing education about e-commerce strategies. The industry continues to change at a rapid pace, and those who keep learning stand the best chance of prospering.

 

 

 

We're Using Less Packaging

Never before have so many products been sold (and shipped) to so many people, yet statistics show that  we are using less packaging per person than before.  According to  the EPA and the Census Bureau, from 2000-2014 the amount of discarded packaging in the U.S. increased by only 1.1%  while the  population grew by 13%. 

How has that happened?

Mostly through more efficient (and recyclable) packaging. Gone are items like clam- shell  packages that are both impossible to open and non-recyclable. Most plastic packaging today, in addition to being customer-friendly, is recyclable, even the ubiquitous plastic grocery sacks.

Then there are  outer shipping boxes. On the e-commerce side, dimensional charges by FedEx, UPS and the USPS add cost (the bigger the box, the more expensive the shipment, regardless of weight). Because of this, reducing shipment sizes has become a focus, both with the interior package and the outer  shipping box. Plus, inside protective filler these days tends to be composed of recycled materials. 

There has been a lot of progress in reducing waste, though we still have  a long way to go in achieving the the ultimate objective -- sustainability.

 

 

Free Shipping Strategies

It's not that everybody wants free shipping,it's that they  expect it.

So how do you solve the free-shipping issue when a company like Amazon is willing to lose $12 billion a year on shipping, delivering goods for free through deficit spending.

Here are a few strategies:

 

Minimum Order Amount

Set a purchase threshold before free shipping kicks in, which involves careful analysis of cost-of-goods and profit.  What is your typical per-order amount, and what is the profit on that? Setting a purchase threshold slightly higher than your typical order might cause customers to order more than usual in order to get the  free shipping. 

 

Targeted Free Shipping

Only offer free shipping on certain items (or certain categories), preferably  ones that cost you the least to ship (smaller and lighter).

 

Charge for Expedited Shipping Only

Depending on how you structure your shipping, you can give away the slow option (Ground, SmartPost, USPS, etc.) but charge for expedited (two-day or overnight). This will at least limit the damage.

 

Build  Shipping Costs Into the Product Price

This is the equivalent of charging $0.99 instead of $1.00, but it works. People love free shipping and will sometimes ignore companies that don't offer it. If you check out the prices for items that qualify for Amazon Prime vs. those that don't, you'll find there is often a jump in price for Amazon Prime orders. So Amazon isn't giving anything away, just creating the perception.

 

Offer a Subscription Program

If you have a product that requires regular replenishment, a subscription model can be a very cost-effective offer, allowing you to batch orders and send them all out at once. It is cheaper to assemble 250 orders on one day than 50 per day spread out over the work week. If you have enough volume, you might qualify for a remailer who offers  lower shipping costs, and if not, the resulting labor efficiency will at least cancel out some of your shipping costs.  

 

Perception is an important part of reality, and people always like to believe they are getting something for free, even if they got lured into making a bigger purchase than usual or paid for the shipping through a higher item price.