I work mostly with dropship suppliers, as I have very little in the way of warehouse space. I know a lot of storefronts offer free shipping and handling on orders, and I was just wondering when that�s a good idea, and how to implement it.

There’s definite pros and cons to free shipping, and unless you work out an amazing deal with your supplier, you’ll figure out the big contradiction with free shipping-- increased costs. If you pay for shipping that means the cost of that shipping gets tagged right on top of your overhead. Your day-to-day cost of doing business just increased, often by a good bit.

That’s why you have to take the long view when it comes down to free shipping. You’re daily margins might slip a bit, but the likely increased volume in sales will compensate for that. ebay’s search algorithm, “Best Match”, favors free shipping. That is, listings with free shipping are more likely to show up at the top of ebay SERPs.

That said, you don’t want to just comp shipping out of hand. Take a tactical approach, and you should be OK--

● Free dropshipping

The ideal situation, obviously, is if you don’t actually have to pay for shipping in the first place. Some suppliers will offer this deal, but believe that you’ll be paying for the favor in some way. There’s a few suppliers on esources.co.uk offer free dropshipping. Search around, and ask a lot of questions about where the cost of shipping actually shows up.

● Bundles

Offer bundled items, and give free shipping for the bundles.

For example,

○ DVDR spools bundled with jewel cases and labels
○ Consumable products like full color sets of ink cartridges, or a bundle of batteries, AAA to D.

● Multiple order discounts

Offer free shipping any time a customer makes multiple-product orders. Encourages the customer to use you for a variety of goods.

● Minimum orders

Figure out what point on the cost curve free shipping will cost you the least, that is, if the per-item shipping cost for shipping out 5 units is something you’re comfortable eating, then offer free shipping on any order of 5 or more items.

● First-time customer referrals discount

I highly recommend this tactic-- offer free shipping on the first order for anyone referred by a regular customer. You might even offer comped shipping and handling on the next order made by the referring customer. Customers appreciate it when vendors reward their loyalty.

Fundamentally, free shipping is a long game. Unless you are very lucky, you won’t likely see a huge benefit in the very short term, so you want to plan with an eye on overall profits and the continued good health of your storefront.

Don�t forget to be aware of the market you�re in. If a majority of sellers in your niche are offering free shipping, you really just need to choke down any costs and climb aboard that wagon. You obviously want to do it with an eye on profits, but you�ll be left out in the cold if you don�t offer it.

Conversely, if free shipping isn�t all that popular among your �peers�, then crunch some numbers and work out whether it�ll be profitable for you.