New product suppliers can actually lose their profits through small business shipping. In their beginning stages, most companies will offer free shipping as a back-end promotional strategy. No one can refuse a free offer without a legitimate reason, so this promotional strategy works 90-100% of the time. The company views this loss as a marketing expense while their budding business grows. After a few years in business, the loss becomes apparent, and the new customer base becomes the existing customer base. How can free mailings be marketing expenses when repeat customers are using this same offer?
The Logistical Side of Marketing
For a lax business owner, all is well if profits are exceeding losses regularly. For a profit-diriven person, free shipping may be a problem once the business reaches a certain level of success. This idea attracts a slew of customers in the begining, but word-of-mouth becomes the dominant promoter if the product is good. Why keep a free mailing offer when customers will order your product at any price point? Raising the price to offset costs will work, but the loss will still exist, and the word “free” will still be the biggest marketing tool. To advance as a serious provider, the company must find a way to separate mailings from marketing.
Three Ways to Make the Logistical Transition Smoothly
To ease out of this promotion cleverly, the seller can change free shipping into free shipping for the first order. The signature offer will still be in place, and the customer will still have an incentive before them. Older customers may not appreciate this deal, but most of them will stick around if they like the product. Mailing price increases are miniscule issues to repeat customers and happy product testers.
Discount mailing is another transitional move that will allow the company to adjust. Instead of zero dollars, they can charge $2.99 or a similar low price for mailing services. This may seem redundant, but it is far better than providing a service for nothing in return. In three months to a year, $2.99 can turn into a sizeable amount — even if it is at or below cost.
Lastly, the company can offer free shipping on new products and sample packs only. They could remove the free stamp from existing products, wholesale products, and bulk orders (if applicable). As an added bonus, they can offer hourly shipping for every local customer ordering in bulk. With the help of courier services, they can create an alternate mailing option and an alternate revenue stream for the business. You should visit the Flagship Courier Solutions blog if you would like more information.