When is Free Shipping not Free?

business delivery Free shipping independent business small business

Ok. I don't normally write blogposts about how I run my business, there are plenty of people out there who will tell you how to do that and they can probably do a better job of it than me. There are, however, a couple of topics that I do get on my high horse about. One is pricing and people who under price their work and the other is free shipping.

When the email landed in my inbox from Etsy this afternoon, I read it and deleted it because I already offer free worldwide shipping on Etsy and on this shop (I don't on NOTHS but that's because I don't have any control over their overseas shipping charges). I then braced myself for the inevitable fall out in the various facebook groups i'm in as people wring their hands and moan about how big, bad Etsy are telling them how to run their business. But, what if Etsy are trying to help you sell more?

I changed to free UK shipping a couple of years ago and it was the single best thing I did for my business so I followed that up earlier this year by offering free world wide shipping. I'm aware that my customers are going to read this but everyone needs to know that even if I offer free shipping, someone has got to pay for it. Free shipping is NEVER free. Yes, it means slightly higher prices on your products but on market place sites like Etsy it can mean the difference between a sale or not.

Imagine you're shopping online and you add four items to your basket. Two of them have a £4 shipping cost on there and two are free shipping. Suddenly, you're spending an extra £8 on shipping and you'd rather spend that money on a thing rather than a shipping. And you've got a limit on how much you can spend.  The item that is statistically more likely to get dropped from the basket, is one of the items with shipping on it. This isn't just guess work, sites like Etsy and NOTHS have a decade of data on what gets dropped from baskets and it is overwhelmingly something with a shipping charge that gets dropped.

Free shipping also gets a little badge on the listing in search. Free shipping is a perk to customers, the badge gives customers that vital perk up front and your item will get clicked on more in search. Those extra eyes on your products and fewer abandoned items mean more sales.

But just how do you offer free shipping? Like I said, someone has to pay for it.  This is how I did it.

First I worked out my average postage cost. It was no more complicated than finding out how much I spent on postage in a month and dividing it by the number of orders shipped. I did this over a period of 6 months and I review it every three months or so to take into account that my sales overseas have increased as a result of the change. My average cost is £3.75 per order, they mostly go small packet and I have a Royal Mail account so I pay a bit less than you pay at the post office counter. A small packet in the UK with Royal Mail is £3.55 so it's not a huge lift. This includes orders with more than one item in it, domestic next day orders and all airmail items. I do offer a paid shipping upgrade where you can add tracking or domestic next day for a small additional fee. Most people don't upgrade.

After I worked it out, I added it onto my retail price. So my personalised stamp that was at a £15 price point (rounded up it was about £14.38 but that isn't a nice round number) now sells for £18 with free shipping. And my products are comfortably priced. They're not the highest, compared to others, but they're not the lowest either.

I added the worldwide shipping earlier this year and I have been monitoring it closely. I've had an increase in orders to the US and Australia since implementing it. A few customers in Australia have said that it's cheaper to buy from the UK than to ship across country.

Now the slight downside is that sometimes, customers will buy multiple items and they will pay for slightly postage than they are getting. However, they've added it to their basket at that price, they thought it was worth it. And, now that I'm comfortable the costs are all covered, I can offer multibuy promotions that I couldn't really afford before.

There is another bonus though if you're trying to scale your business. If offering free shipping means you sell more, that means you place larger orders for materials, or stuff with your designs on and most suppliers will offer you a volume discount. More sales means more materials but more materials at a lower price is a win all round. You might even find that your prices fall and the shipping cost is offset by the bulk discount savings on your materials. And if you're selling items that aren't handmade (like vintage items for example) then if you sell more, you can negotiate better shipping rates with your shipping handler.

Putting your price up doesn't always seem like the sensible thing to do, but in my case, it really worked and I can understand why Etsy want people to do it. More sales equals more commission for them, they are a business after all, just like me.

2021 Update - Two years later, Brexit and a global pandemic and you're probably wondering if this all still applies, right? Well, it does and it doesn't.  Mid way through 2020 and to go on top of all of the pandemic mess, a certain perma-tanned menace starting messing with the US postal service. There was an almighty hike in prices for mail going to the US and it led to a bit of head scratching and the only sensible short-term answer was to put a small charge on all items going there and this is still in place. I'm hoping to be able to change that at some point but the difference in prices between the US and the rest of the world is significant so for now at least, it's staying.

Brexit also means that I may not be able to continue to offer sales to the EU without huge amounts of admin. I may be able to continue to sell to Europe via Etsy but possibly not via my website. I'll keep you up to date.

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