Everyone loves seeing that little announcement bar at the top of the home screen “FREE SHIPPING ON ALL ORDERS”. Everyone except for the retailer who has to actually pay for the shipping that is.
Because consumers love free shipping, does that mean you should offer free shipping on your
eCommerce store? Well, it kind of depends on several factors which I’ll go over in this article.
There is no right or wrong answer when it comes to whether you should offer free shipping or not. There are lots of mixed opinions among online retailers and it shows when you shop online. Many stores offer free shipping and many charges for it. This is how I would approach it as a beginner who’s creating their first online store.
Offer free shipping initially so you know if the product is profitable. Once you have an average sales volume, start testing. Test various shipping prices from $4.95 up to $14.95, you can then try free shipping with orders over varying amounts. The goal is to maximize profits without deterring customers.
Do Customers Prefer Free Shipping or Lower Product Costs?
We all get that little dopamine hit when we get to the checkout and see FREE SHIPPING. But we also get that dopamine hit when we see a bargain product price. But which one is more appealing to the consumer?
Each customer will prefer different things and there’s only one way to find out which your customer base prefers, and that’s to test.
If you plan to sell products from AliExpress, I suggest you use my article on shipping times from AliExpress as a resource for listing your own shipping times.
I always start off a new Shopify store with free shipping. I want the least amount of variables possible impacting my sales so I have a baseline in which to accurately test. Here are a few things I would generally try:
- Standard free shipping with regular priced products
- $4.95 shipping with product being $5 cheaper
- $9.95 shipping with product being $10 cheaper
- Free shipping on orders over $30
- Free shipping on orders of $50
I keep testing until I find which deal my customers find the most appealing and what makes me the most profit. These tests are for a standard low cost product in a country with low shipping rates, this will obviously differ for everyone.
The kinds of variables that can impact which shipping offer is best can be:
- Where you’re shipping too
- Where you’re shipping from
- The type of product your shipping
- The price of your product
- The size and weight of your product
- Does your product have many upsells
- The audience you’re selling to
All these factors can determine whether you should offer free or charge for shipping and how much you should charge. Don’t dismiss how important it is to get this right. An extra few dollars per sale in your pocket can really add up when you’re making hundreds of sales per week.
Does Free Shipping Increase Sales?
From my experience, free shipping doesn’t necessarily increase sales. If you are selling a small and lightweight product most consumers aren’t too concerned about how expensive the shipping will be. If they have to pay it they know it won’t break the bank.
This does not necessarily mean you should charge shipping for low cost products, it just means they have a general idea of the price and aren’t scared.
Offering free shipping on larger heavier products can however increase sales dramatically. This is because customers are concerned about large hidden costs.
You will find if you make it clear that you offer free shipping on your home page and your product page, you will have most people follow through with the sale once they click the buy now button. However, if you offer a lower cost product but charge for shipping, this will be reversed. You will have more people click through to your checkout page, but you will have a higher percentage of abandoned carts once they see the shipping cost.
This is why it’s important to test. You need to find out which is most profitable for your business.
If you want to charge for shipping, the higher price you charge the more abandoned carts you see. The goal is to find the sweet spot between maximizing your profits whilst keeping abandoned carts as low as possible.
If your shipping prices are low enough most customers will just pay the shipping because they can’t be bothered going through the whole checkout process again with another store.
A great app I have used that has abandoned cart recovery, as well as many other great features, is Consistent Cart.
Depending on the price of your product, often charging a lower price for your product and charging for shipping can be perceived as a lower price. For example, if you wanted to charge $26.95 for a product with free shipping. It may appear cheaper to charge $19.95 for the product and $6.95 for the shipping.
Even though this is the same price, it’s perceived much lower. This is why testing is so important to understand how your customer thinks.
Should you Offer Free Shipping?
Personally, I think it really depends on the type of product you’re selling, the price point of the product and whereabouts in the world you’re dropshipping too.
If you’re selling standard products that are reasonably popular, I would generally offer free shipping. This is because these products will be sold in other stores and if your competitors are offering free shipping, you need to too.
If you’re selling unique products that really stand out and aren’t easily found, you can charge for shipping and get away with it. Consumers will not only pay for shipping, but they’ll also be more likely to wait long periods for the product to be shipped as it’s unique.
People won’t pay for shipping or wait longer if they can find it at a local retail store or if it’s easily found on Amazon. A customer knows if they don’t pay for the shipping, they may not find this product again.
When it comes to high ticket products over $100, I would always offer free shipping. If you’re selling quality products at a high price point, you need to provide your customer with the best possible shopping experience and offering free shipping is part of that service.
It’s like buying a car and they offer you a coffee whilst you’re waiting and add the coffee to the price of the car.
By adding the price of shipping onto the product price and offering free shipping, it enhances the feeling a customer gets whilst not costing you extra. Let’s say you’re selling a product for $169.95, you’re better off charging them $179.95 and offering FREE SHIPPING other than $169.95 plus $10 for shipping.
The additional $10 on the cost of the product price is only a small percentage of the actual price and isn’t usually a deal-breaker. The $10 they have to pay for the shipping can potentially be a deal-breaker. They are making a large purchase and for them to feel as though your still not offering free shipping can frustrate people.
If you’re selling large and heavy products, I would also offer free shipping and add it to the cost of the item. I would however only do this if I was shipping the product domestically and if it was being shipped to major cities and towns within your country.
Shipping overseas and to rural or secluded areas with poor infrastructure can be expensive and is not a viable option.
The reason I would offer free shipping for large and heavy products is that shipping costs for oversized products scare people. They have no idea of the cost and most assume it will cost them a fortune and they won’t proceed to the next step of the sale until they know the actual cost.
Even if the product has a high price, if the customer wants the product enough and you’re offering free shipping, they will purchase the product. The unknown shipping price will be a deterrent, and often shipping large products is not as expensive as many people think.
This may sound counterintuitive to what most online retailers say and do when it comes to shipping large products. There’s a reason they don’t offer free shipping and that’s because the customer expects to pay for shipping and they know they can get away with it.
This doesn’t mean it’s the smartest thing to do. I don’t want to deter any customers when it comes to high ticket products.
Benefits of Free Shipping
- It eleviates the customers fear of the unknown hidden shipping cost.
- Being upfront initially about free shipping provides you more trust.
- It simplifies the whole shipping process.
- Free shipping often converts into more repeat purchases.
- It enables you to compete better with your competitors including Amazon.
- On average you will have less abanded carts.
Disadvantages of Free Shipping
- Absorbing the cost of the shipping means you can’t offer your products at the lowest prices.
- You can’t make a profit off the shipping prices.
- It can lower your sales volume if the product pricing is higher.
- You can end up running at a loss if you offer free shipping and the shipping costs end up being to high.
Summary (My Opinion)
There is no right or wrong answer when it comes to offering free shipping. The only way of knowing for sure is to test, test and test some more.
From my experience, if you’re selling lower cost products I personally like to offer free shipping if the customer spends a specific amount of money. This is the best way of increasing your AOV (Average order value).
The amount in which you should offer free shipping will differ from store to store. The goal is to increase your AOV as high as possible without deterring customers from the sale.
This won’t really work if it’s a product that people only need one of and doesn’t really have any accessories. If it’s a product customers want more than one of and has multiple accessories, this works great.
I wish I could tell you the optimal way to maximize your profits with your shipping, but there are so many variables that I’d be lying if I gave you a straight answer.
