Let’s begin with the ‘what is’ question: What is free shipping vs standard shipping? This shipping is free for the consumer or customer. Normally the company will choose the least costly shipping rate, which sometimes is referred to as the standard shipping rate, and they will offer shipping free to their customers. Let’s look at the reasoning and the details.
Companies offer free shipping or discounted shipping for online purchases to attract customers. Free shipping will have an impact on the business, of course, affecting the profit margins. Nowadays, many brands offer some versions of discounted shipping as part of their sales strategy. The customers expect it, other brands offer it, so oftentimes some version of free or discounted shipping will be offered.
Certain customers are attracted by free shipping, and companies use this method to increase sales. For example, when companies sell similar or the same products, offering this type of shipping can increase sales. If the sales are increased enough, the bottom line will be enough revenue to make up for the cost of the shipping. So, when one competitor says we offer free shipping, others will also. Is it better? The answer is for the customer to determine.
Free standard shipping is never the fastest type of delivery. Readers may be wondering, exactly how fast is free standard shipping? While standard shipping comes in many names, i.e. standard, economy, ground, and regular shipping service, the delivery time will usually be 3-5 business days because the delivery arrives via ground.
Online shoppers will reject free shipping and pay for their delivery if they want their product to arrive quickly. Two-day delivery is popular. There may be circumstances where online shoppers need the speed of delivery and they are willing to pay for it, but other than that, free standard shipping will win the customer.
Free shipping can increase conversions and sales. Studies have shown that this type of shipping can boost average order value. Experts say that if the seller wants to leverage this shipping service, they should offer a threshold of shipping free on orders over $50 for example. Customers want to take advantage of free shipping, so they are willing to purchase more items to qualify for it. Studies have shown that shoppers will purchase more to qualify for this shipping service.
Of course, free shipping is an extra cost to the business. Rather than use their advertising to offer a coupon for a percent off, experts suggest that free standard shipping is more attractive to customers.
One of the recommendations on how to save on shipping is to use fulfillment services. If the fulfillment company has warehouses in several locations, bi-coastal for example, using a fulfillment company could reduce the distance packages need to travel, thus reducing the cost of shipping, even after fulfillment fees.
Another method for sellers is to provide free shipping to buyers who are in locations near the warehouse and offer this type of shipping with a minimum purchase required for locations that are further away.
We have had readers ask if standard shipping is better than free shipping, and the answer is… when you propose free shipping it is almost always at the standard shipping costs rate. So the question is kind of moot… when you provide free shipping it is free standard shipping, also referred to as economy, ground, regular, and so forth.
How then would a company control costs when every dollar counts? As mentioned before, we recommend that you use fulfillment services. As we said, shipping is one of an online seller’s biggest costs. The higher the shipping costs, the slimmer the profit margins will be.
There may be questions as to whether flat-rate shipping could save money over standard shipping costs. A flat rate is often chosen by eCommerce sellers who want to simplify their shipping. Flat-rate is not a solution for everyone because it is standardized and not able to meet unique needs.
When is it cheaper to use flat rate? The flat rate method is determined by the size of the box or envelope and not according to dimensional weight (DIM). One thing that shippers can be attracted to is flat rate because, during peak season, when other shippers may add surcharges, flat rate packages are exempt.
Another positive is that the charges will likely be the same regardless of the destination. An eCommerce seller will pay the same price as long as the product fits in the box and doesn’t exceed the maximum weight. The purpose of flat rate is to offer businesses a way of controlling variations that can happen because of shipping distance, weight, and seasonal peaks.
Free shipping can be offered with flat-rate and standard shipping as well. For online sellers with products that are suitable for flat rate shipping it’s a way to standardize the shipping costs.
Flat rate and standard shipping are two entirely different ways of calculating rates. They are sometimes spoken of interchangeably, but that is in error. Standard shipping costs are often the most economical and as mentioned before, standard is usually what a merchant uses when offering free shipping.
Standard shipping considers the size, weight, shape, and destination of the package. On the other hand, flat rate shipping is one charge for a certain size envelope or box, no matter the destination and weight, within limits. Flat rate pricing does not include variables like DIM weight and shipping zones.
The price to ship the particular size of box or envelope is going to remain the same, no matter how heavy the box or envelope contents (within limits) and no matter the shipping zone, so flat-rate is one method of ensuring consistency in shipping cost whereas standard shipping costs are the lowest priced, but variable.
Readers may be wondering if USPS Priority Mail is the same as USPS Flat Rate. There is a difference, once again, in the way shipping cost is calculated. USPS Priority Mail uses DIM weight and shipping distance, and USPS Flat Rate does not. Flat Rate uses only the package size.
The carriers all offer their own version of a flat rate, some requiring that the customer use their packaging and others allowing the customer to use their own packaging if it fits the required dimensions. There are weight limits in flat rate shipping at which extra fees are charged.
Free shipping is offered to engage the customer and increase sales. Normally, when a company offers free standard shipping, they are using the standard shipping of the carrier, also referred to as economy, ground, regular, and even flat-rate shipping.
Free shipping would be a part of the sales strategy of the company. The company may sometimes require a minimum purchase to provide this but often in eCommerce some free shipping is offered. This shipping has an impact on the business, and the business will adjust to it by raising prices or requiring a minimum purchase. Some version of discounted shipping is now the norm with popular eCommerce brands.
Customers are willing to utilize paid shipping when they want faster delivery than the usual 3-5 days for free standard shipping. Otherwise, they are very attracted to free shipping, and offering this can increase sales to the degree that the cost is absorbed and the bottom-line revenue is good.
Let’s say eCommerce companies are selling very similar products and competitors offer free delivery or free shipping – if one offers free shipping, the other companies must offer it as well or else lower the price to be equally as attractive to the customer.
If you are the customer, which would you rather choose: a $49 product with free shipping or the same product for $39 plus $10 shipping? The trend in eCommerce today is free shipping, and customers expect it. The question is, is it better to pass shipping fees to customers as part of perceived free shipping or to offer a lower price with shipping charges added on?
As mentioned, online shoppers will pay for faster shipping – they will pay for 2-day, overnight, and so forth, but other than that, eCommerce customers have become accustomed to free shipping, which will win the sale. The best way for eCommerce sellers to leverage this type of shipping is to offer a threshold, i.e. when you buy a $50 order the shipping will be free. The other method of lowering the price of the product enough that the customer will choose it is a workable option.
Now let’s get into standard shipping costs to get a more comprehensive understanding. Standard is also referred to as economy, ground, basic, budget, regular shipping service, and so forth. These shipments arrive via ground usually within 3-5 business days. It is the cheapest shipping service available from a courier and when free shipping is offered, it will be standard shipping.
As we said, standard shipping travels via ground. Express shipping services are delivered in 1-2 days because they travel by air. All couriers offer standard shipping services, including USPS, UPS, and FedEx.
*USPS offers USPS First Class Mail, which is for items weighing less than one pound, and USPS Priority Mail which is for items up to 70 pounds. Both of these arrive within 2-5 business days and tracking is included.
*UPS calls its standard shipping UPS Ground Shipping. UPS Ground is offered for all packages that weigh less than 150 pounds. Day-definite delivery in 1-5 days depending on location. Tracking is included.
*FedEx offers standard shipping and calls it FedEx Ground. FedEx Ground covers all packages up to 150 pounds. Delivery is in 1-5 business days and 3-7 days to Alaska or Hawaii. Tracking is included.
Standard shipping is the cheapest shipping option from any courier. As you have seen, the final price is determined by delivery distance, package weight, size, and any value-added shipping features like delivery confirmation.
Fortunately, you don’t need to buy boxes for standard shipping. Standard shipping services let you use whatever box fits your item. You can order free standard shipping boxes in any size from all courier websites. Or just use small, medium, or large boxes that are available for purchase.
On an order-by-order basis, the goal of the fulfillment company will be to find freight shipping services that meet the online seller’s desired service level at the lowest possible cost. If the seller wants the fulfillment company to locate the lowest standard shipping costs to offer free shipping, the fulfillment company has search systems and carrier relationships that make their shipping choice the lowest cost for the right time frame desired.
The fulfillment company is an expert at satisfying its clients’ shipping needs. What they will do is assume the role of each seller’s operations arm, performing shipping fulfillment services, doing rate shopping, and logistics management. It’s the fulfillment company’s role to offer solutions, including warehouse locations across the country that will help them achieve that objective.
The highest quality fulfillment companies audit every transaction, making sure that the client is not charged any invalid fees and that they pay only for packages that arrive within the guaranteed delivery time. The fulfillment company will have established great rates with the major carriers, such as UPS, DHL, FedEx, USPS, and Passport for international shipping. The fulfillment also works with shipping partners such as ProShip’s manifest system and VeriShip’s auditing service.
The fulfillment company can automatically choose proper shipping methods and accounts based on order data or order characteristics. They will ship with all the major parcel carriers and many other shipping service providers using a multi-carrier manifest system. And they can do order splits based on geographic information and order criteria.
And there are significant additional benefits to utilizing a fulfillment company. They will have expertise in international shipping; they will be proficient in hazardous goods shipping; they may have warehouses in multiple locations close to ports; they are experts on supply chain logistics; they understand LTL/TL friend (which means less than truckload/truck load); and they know all of the shipping rules and regulations.
AMS has been in the fulfillment business for more than 20 years. Throughout the years of growing into a mid-sized, bi-coastal, full-service fulfillment company, AMS has assumed the role of a partner to its clients – an experienced arm, capable of managing a client’s back-end tasks while the client concentrates on growing their business. AMS’ client services team is experienced and exceptional at understanding and solving unique challenges.
AMS uses absolutely the best shipping and client integration technology, which is a necessity to ensure that a client’s fulfillment needs are met with scale, excellence, accuracy, and timeliness. Because AMS is a bi-coastal solution, clients can lower shipping costs and speed up delivery times. AMS also has shipping software and relationships with carriers to assure clients that when they offer free shipping, it will be at the lowest cost possible.
Finally, AMS is proud to be a Certified B Corporation; “doing good” while doing a great job helps our communities and our planet thrive.
