“Should I offer free shipping” is one of the top questions e-commerce store owners ask (including myself) – so I did some research and testing to find out.
The short answer is yes, but for best effect use it to spur on additional purchases only. Free shipping can drive more sales but not if you lose money on each sale. Don’t downplay how much time and money it takes to ship items to your customer.
So you need to use “free shipping” as a tool to for growth – don’t let it eat into your profit margin when you don’t have to.
The power of FREE
Free can have a magic effect on people. Once they see it they go crazy something they would never have wanted all of a sudden become irresistible just because it’s free. In his best selling book “Predicably Irrational” Dan Ariely talks about human behaviour when we see “free”.
“Most transactions have an upside and a downside, but when something is FREE! we forget the downside. FREE! gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is.” – Dan Ariely
In one test, they gave people two offers; one was a $10 Amazon gift certificate for free, the other was a $20 gift card for $7. More people chose the $10 gift card even though option two provided more value.
In another example when Amazon implemented a free shipping offer, sales went up in each country – except one – France. Were French shoppers immune to the magic of free? No, it turns out France did not implement free shipping they charged $0.20 shipping. But when they switched to free shipping they saw the same surge in sales too.
So what’s the best way to use free shipping?
If you’re in a competitive industry (like beauty, fashion, cosmetics) you might not be able to bundle the full price of shipping into your price to offer “free shipping” without being uncompetitive. So separate it out from your product cost, customers expect to pay to ship (even if they don’t like it) and entice them to buy more, to offset shipping.
If you can’t do that then offer tiered shipping e.g. Free standard shipping or $5 express shipping, if people are short on time they will happily pay for express.
Why customers don’t like paying for shipping
Value perception: If your product is $15 and shipping is $10 it can be a hard pill to swallow for some customers.
- If you can bundle your shipping costs into your product price, offering $25 with free shipping customers are much happier.
- But if you can’t upsell to a free shipping threshold e.g. Spend $50 and qualify for FREE Shiping – plus it usually costs the same to send one item as it does two e.g. custom printed scarfs so multibuy is a great way for customers to get more value from their flat rate shipping fee.
Free shipping is everywhere: let’s face it free shipping is everywhere and Amazon Prime is making is hard to compete in some categories with their subscribe and save offer. Customers are expecting to see “free shipping” so when they have to pay, they can be disappointed. Not a feeling we want to evoke.
When to offer free
You want to be smart, only offer free shipping to drive a higher dollar value shopping cart. We want you to have a healthy profit margin, so use “free shipping” to encourage people to add more to their cart and to cross over into a threshold to free shipping e.g. “Free global shipping on all orders over $75”.
See some examples in the wild:
Who Gives a Crap (Toilet Roll)
Hey Tiger (Chocolate)
Clearly communicate your shipping rates
Don’t hide your shipping rates until the very last checkout page, be very clear and transparent. Have a shipping page, a FAQ and link to it from a hello bar for maximum impact.
We hope you found our article “Should you offer free shipping in your e-commerce store?” helpful if you have any question about free shipping we didn’t tackle, feel free to drop it in the comments or contact us. Happy selling!