I wanted to talk about something that seems to be on everyone’s mind. Shipping! Not in terms of finding suppliers to ship the orders, but in terms of strategy.
Using Shipping as an upsell.
For new Dropshippers struggling to breakeven to seasoned professionals looking to squeeze out every last penny, I think we can all agree that any bump in our Average Order Value (AOV) is huge.
This shipping strategy that I use has increased my AOV by roughly $3 without any extra apps and at no cost to me. That means $3 to the bottom line on average with every single order.
You may be thinking, $3 doesn’t seem like much money.
Why bother?
This takes 5 minutes to set up and then you can forget about it forever.
$3 for 5 minutes of your time, that is $36 /hour of work… FOR EVERY SALE YOU MAKE.
If you make 10 sales a day, that’s 5 minutes of work makes you an additional $30 a day or $900 a month.
5 minutes of work for $900 a month.
This system compounds.
Here’s how we do it.
We use psychology to sell something we have been giving away for FREE.
The reason this system works is we are offering something for free, something at a reasonable cost, and a feature no one cares about at an inherent cost that isn’t worthwhile to most.
This is the foundation of a psychological effect called price anchoring (which you can implement into your products as well as your shipping).
Why does this work? Well to start, we are going to offer FREE SHIPPING to all of our customers.
There is an implied tracking with all shipping, but we don’t put that into the description.
Why?
To make our next offer look incredibly valuable.
Our next offer?
PLUS SHIPPING, which offers tracking and insurance for only $4.99.
Don’t riot yet, I will explain it all after the final offer.
Final offer,
PREMIUM SHIPPING, Tracking Insurance, and 1-year warranty. $7.99
After split testing over 30,000 orders with different offers and different price points, this is what I found to be the most profitable.
This works at the price points and with the features that are mentioned.
Do it exactly this way.
Now to the psychology of this:
We all expect free shipping because of the current e-commerce climate. Amazon, Walmart, Target… all the big names have made online buying synonymous with free shipping. Keep this offer in plain sight and first on your list.
Now here is where the big twist comes in and we can use those nasty scammers to our advantage.
Shopify and E-Comm, in general, have a very high risk involved for the customers as they hear all these horror stories of being scammed, never receiving the product, poor product quality.
Offering Insurance on the package gives peace of mind and allows the customer to rest easy knowing that if something happens they are covered.
How can we offer this without any additional cost?
E-Packet packages are insured and have free tracking.
We are offering an upsell for something we already currently have but are not offering in FREE SHIPPING packages.
Here is where that $4.99 sounds like a real steal. PREMIUM SHIPPING. How many times did you go up to the cashier at a big box store and pay the extra the for 1,3, or 5-year warranty?
Implicitly, these are worthless to most. We expect that these products will outlast the warranty and the company is just trying to make money off your warranty purchase (which they, and we, are).
While you will see some conversions on this last one, it is meant to act as a price anchor on a feature we devalue and make the middle package more appealing.
The FREE SHIPPING package is meant to offer something for our customers who are budget conscious and have already built trust.
This acts as a price anchor for features alone, saying that Tracking and Insurance are a $5 value. If the product you are selling is only $5, this won’t work. If you are selling a product for $20+ it will work just fine.
What I saw using this exact method is the following:
47% – FREE SHIPPING
44% – PLUS SHIPPING
9% – PREMIUM SHIPPING
Just do the math, that leads to an average increase in AOV of $2.9147 ~$3
So what’s stopping you? Get on your store and go make yourself some more money.
