It’s no secret that free shipping can be a killer promotion for ecommerce retailers. In fact, shipping charges period can make or break your conversion rates – it’s the number one reason for cart abandonment online. But as you know, just because you’re offering free shipping to your customers doesn’t mean your freight carrier is going to extend the same sweet deal to you. So how does an online seller pedal free shipping without losing the bank, especially during the holiday season?

Here are just a few ideas that we’ve seen work in the ecommerce space:

Pick items that make sense – Every ecommerce retailer knows which items in inventory have the highest margins. Offer no-cost shipping on those items to “make up” for lost freight revenue. Another idea – work with your order fulfillment provider to select items that ship well, i.e. are the lightest/smallest or have the lowest shipping costs to you. You can even ask them to help you identify which items are least costly during the pick and pack process (least labor, no kitting, least shipping prep time) and offer free shipping on those items as well.

Offer it up as a part of membership – Give frequent purchasers a chance to “buy” free shipping by paying an annual fee or membership (see: Amazon and its Amazon Prime program). Or, if you already have some type of fee-based membership program in place, consider offering free shipping as one of the perks to reward loyal customers.

Participate in Free Shipping Day – Did you know that there’s a Free Shipping Day? Well, there is. It even has its own website! Sign up to add your logo to the list and tout your participation in your online ads and email marketing campaigns. Free Shipping Day 2011 is December 16^th – so not only do you minimize freight losses by limiting it to one day, but you’ll be late enough in the season where some consumers have probably already completed their purchases with you.

Can’t go free? Be upfront – Sure, free shipping is a great marketing piece, but it doesn’t make sense for every online retailer. If you can’t or don’t want to waive shipping costs, consider other methods to avoid cart abandonment. You can make shipping charges a percentage of total purchase price. You can offer a flat rate regardless of purchase amount (which often encourages higher order values as customers try to “get the maximum value” from their purchase). No matter what you choose to do, make sure you’re upfront and honest with shoppers about shipping fees long before the checkout page. That will reduce cart abandonment and make consumers more likely to trust you than if you attempt to sneak in an exorbitant charge at the last minute.

As an online retailer, there are lots of ways to save on freight year-round. Have you considered an outsourced fulfillment services provider? Not only can an outsourced provider offer better freight rates than most merchants can achieve on their own, but their location in comparison to your customer base can also result in lower shipping charges and reduced transit times. Interested in learning more? Contact Fifth Gear!

Tags: ecommerce fulfillment, free shipping, holiday planning, online marketing, order fulfillment, outsourced order fulfillment, shipping rates, shopping cart abandonement