As sweet as the word ‘free’ sounds, it’s an obvious strategy.
Today, even most customers know that it’s not really ‘free’. Moreover, if you search for free shipping in eCommerce, the topic has been exhaustively researched by eCommerce experts.
In this article, we’ll dig deeper into how free shipping, when done well, can still boost conversions.
Do Free Shipping Offers Still Matter for Conversions?
We were intrigued when a client asked us if free shipping would really drive conversions for her online store.
The short answer: It depends on different factors
Fast and Free. This is every customer’s default expectation mode when it comes to shipping.
However, free shipping won’t magically increase conversions. You need to apply it strategically.
When we consider the psychology of online shopping, high shipping costs are cited as the number #1 reason for cart abandonment.
Think about it. Even though you run an eCommerce business, you are a customer as well. And as a customer, if you don’t see any shipping offers, you are bound to be disappointed.
Dive into customer data to understand their behavior.
For example, you might have products that perform well during the holiday season. But sales dip later on. Applying free shipping during the off-season won’t make any significant difference.
Instead, if you apply free shipping to the entire product category during the holidays, then customers might purchase more from the same category. Accordingly, you can plan to stock more of the product when it is in demand and keep remaining for any off-season sales.
Next, consider your industry.
For retail (fashion, cosmetics), grocery, fast-moving products and alike, customers often buy multiple products in the same order. In such scenarios, free shipping works well.
On the other hand, if you sell luxury products like premium leather bags, branded scents, etc, then customers purchase less number of products in one order.
In that case, you can offer different shipping options, with a free shipping option that accommodates regular shipping route. Furthermore, for premium products, you can try bundling them with lesser price range products and offer a discount, which might work better and increase conversions.
ConvertCart Tip: When in doubt, look at your competitors. If most of your competitors offer free shipping on +90$ orders, then you can try offering the same or lesser (factor your margin too!)
You can also gain a competitive advantage with international shipping.
Amazon was one of the first brands to offer free shipping worldwide. Then, it seemed like everyone did.
However, due to the pandemic, international shipping has made headlines. The costs are high and there’s every evidence that it’ll continue to rise.
While customers understand the situation, there’s a higher chance they’ll shop elsewhere to purchase a same or a similar product that is delivered free, affecting conversion rates. In this case, you can apply a higher minimum cart value or recommend product bundles to absorb the shipping costs.
Free shipping has evolved since the days of Amazon’s hyped Prime program. Today, free shipping might be an obvious conversion strategy, however, as new or established eCommerce brands, you still need to determine various factors.
How Free Shipping Impacts Average Order Value (AOV)
Most eCommerce brands know that free shipping is not technically ‘free’, for both eCommerce business owners and customers.
Therefore, you might be wondering how exactly the free shipping model works.
The basic idea is to increase the average order size so that eCommerce stores can sustain some business margins. For example, your AOV is $160 and your average margin is $80. If you’re paying $30 for shipping, then you get to keep $50. eCommerce businesses need to calculate what would make their AOV profitable so that they can absorb the cost of shipping.
So when you try to get an estimate of what the “true cost” of free shipping is, you have to account for several factors.
You will face fierce competition from major retailers. The Amazons and Walmart's of the world are exposed to very different costs and margins compared to small and medium-sized businesses.
Apart from postage cost, you will need to account for:
- delivery area surcharge (DAS)
- extended delivery area surcharge (EDAS)
- packaging material cost,
- labor costs
- payment method fees
The way a business absorbs its shipping costs. Large retailers naturally have the advantage of scale, which means when shipping costs are divided by volume, it’s drastically lesser than what small to mid-sized businesses end up paying.
3 Tips to Set Free Shipping Thresholds (aka Minimum Cart Value)
Free shipping thresholds are the minimum price limits at which eCommerce brands decide to offer free shipping. For customers, this term can also be known as the minimum cart value.
However, eCommerce business owners need to set the “right” free shipping threshold. Here are 3 tips to calculate your free shipping thresholds.
Tip #1. Study Customer Data
Analyze the number of orders and the average order value over a time frame of 6-12 months to reveal conclusive patterns.
Tip #2. Don’t Underestimate Shipping Limits
Fix the issue of setting the free shipping threshold at a lower limit than is sustainable. If your data reveals that customers are not increasing their average order value (AOV), then it’s an indication that they are getting free shipping anyway. This means the incentive to buy more is absent.
Tip #3. Don’t Overestimate Shipping Limits
Fix the issue of setting the free shipping threshold too high. This is a scenario where the average customer won’t find enough incentive to stretch and reach for free shipping. Let’s say your free shipping threshold is at $160, and AOV is at $80, then most likely the average customer won’t want to double their purchase amount just to get free shipping.
7 Examples of How to Announce Free Shipping for Faster Checkouts
1) Prompt Free Shipping Visually
Free shipping thresholds are important to increase the average order size of your eCommerce store. When customers add products to the cart and don’t see free shipping applied in the checkout box, they often abandoned the cart.
Best Online Cabinet collaborated with ConvertCart to implement a progress bar that showed customers how close they were to free shipping. This prompted customers to add more products, increasing the average order size by 21% in three weeks!
Furthermore, you can boost the average order size by offering relevant product recommendations. We love how Kohls has structured their checkout page to cross-sell products and add free shipping prompts.
2) Experiment With Copy
Prompting customers with a free shipping header bar on the home page is something everyone does. So, what else can you do?
Flex your creative copy skills on the header bar. Or you can be straightforward and outline additional rewards like return policy and guarantees to assure customers of their purchases. We like how MyCalmBlanket (see above) uses the 😌 emoji that conveys relief and at the same time reflects their brand personality.
While Caraway Home utilizes a sticky header bar, the copy is direct and tells a customer they get a 30-day trial, a reward new customers will find intriguing enough to go down the customer journey.
3) Leverage Time While Offering Free Shipping
Timing is everything in eCommerce stores.
While you might apply scarcity strategies to increase sales, you can leverage some psychology tactics with free shipping as well. FOMO can entice even the most skeptical customer to make a purchase, especially if they get the feeling of exclusivity.
While bestsellers are great for profit margins, are you struggling to sell some products? Then, try to implement this strategy:
- Create a list of products that don’t get much traction.
- Next, you can add the relevant products to bundles.
- On your eCommerce store, you can list them with limited stock tags and then additionally offer free shipping.
You can also free shipping on returns or exchange programs. Furthermore, keep in mind, that if some products are not selling despite implementing various strategies, then it’s time to retire them.
4) Create An Entire Product Category
Free shipping can be the edge you need over competitors. Especially, if they offer a product category that outsells more than yours.
Make a list of products that your customers might purchase with other products. These complimentary products might not convert on their own.
Such products often have a lesser price range and that common parameter can help you list them under the same category. For example, Amazon built a whole product category of ‘10$ & under’ and highlighted ‘With Free Shipping’ to attract instant attention.
5) Utilize Product Description
This is a simple tip. However, most eCommerce brands don’t make the most of their product description.
If you think about it, the product description is the perfect place to announce free shipping offers. Especially, if your free shipping offers vary often. You can just edit the product description and let customers know about availability.
We love the way BootyBands displays product descriptions. It’s straightforward and tells there’s ‘Free Shipping Today Only!’ before delving into the other details. An additional tag over the product image shows how many barbells have been sold in the past 24 hours, further establishing FOMO to entice customers into making a purchase.
6) Reward Loyal Customers
Research shows that 75% of consumers say they favor companies that offer rewards and 82% of businesses agree that retention is cheaper than acquisition.
Free shipping is one of the best ways to keep your loyal customers happy. However, it’s not possible to offer unlimited free shipping without harming your profits. Offering exclusive free shipping offers as part of the rewards program will be a win-win situation. You will not only get loyal customers but also create exclusivity.
Apart from other offers and benefits, Nykaa Prive members get 4 free shipping coupons, which means customers will make sure to shop more often.
7) Offer Convenience During Checkout
As we have established, it’s not profitable to offer free shipping all the time, for all products.
However, customers will abandon carts if they don’t see free shipping.
Instead, you can build a transparent relationship with your customers. A great way to do this is by giving customers shipping options.
See how Fitbit offers different options that let customers decide their delivery timeframe. Furthermore, they can see shipping details that outline how their shipping methods work.
ConvertCart Pro-Tip: If you have a large number of cart abandonments, offer a free shipping gift card to customers through email marketing to nudge customers back to the eCommerce store.
Bonus: GetFPV Sells More with Same Day Shipping
Honesty is a good policy.
eCommerce brands that transparently communicate their programs will be able to retain and win back customers at a faster rate in the longer run.
As a brand, you should communicate any limitations and restrictions. Due to the pandemic, customers know it’s difficult to run supply chains, especially across different geographies.
Moreover, communicate your strengths as well. GetFPV does it well. Same-day shipping is one of their core USPs and they display it right away on the homepage and checkout pages. This enables customers to purchase products, knowing they will receive the product at the earliest.
5 Interesting Shipping Strategies for Your eCommerce Store
Before we delve into the shipping strategies, here are some statistics to keep in mind:
- 9 out of 10 people will shop online if free shipping is offered
- 50% of customers chose slow shipping because it would be free
- 47% of customers searched for promotional codes that would result in free shipping.
#1. Reduce Cost Anxiety
A recent study made clear that 48% of the 4384 responders would abandon their cart at checkout if they found shipping costs and extra charges to be high. If you combine that with the rate of conversion (which stood at 1.74% in January 2022), you know that free shipping can be a crucial intervention to retain customers.
#2. Apply Free Shipping to Higher Purchase Orders
Several reasons contribute to shoppers not adding to the cart, and not being offered free shipping is one.
In a study by Usability Sciences, of the 56% of shoppers who browsed for products, only 19% placed them in the cart. Of this 19%, only 7% completed a purchase.
While the topmost cited reason was the inability to find a product of their choice, the second was the lack of free shipping. On the other hand, when a free shipping threshold was introduced - “free shipping on orders over $75 - there were 90% more orders.
#3. Boost Your Shipping Speed (if you don’t want to offer free shipping)
Average Order Value (AOV) is a metric that’s not to be taken lightly. Using AOV, it’s possible to forecast sales and make appropriate investment decisions. And free shipping has been seen to improve AOV drastically.
A case in point is how brands Rainbow OPTX and iloveplum were able to drastically improve their AOV. Both brands adopted a 2-day express shipping strategy, which helped Rainbow OPTX increase their AOV by 24%, and iloveplum by 97%.
#4. Offer Free Shipping as Rewards
Customer retention has never mattered more. This is a time when choices are abundant. It takes way more effort to keep existing customers engaged while attracting new customers. However, this is also a time of immense possibility if you have the right strategy in place.
According to a millennial consumer trend report published by Elite Daily, 50.5% of millennials admitted that they feel deeply loyal to their favorite brands.
In this scenario, free shipping increases the chances of a seamless shopping experience. This indirectly increases the chances of more people staying on to continue purchasing from you.
#5. Apply Free Shipping to Limited Products
Free shipping is the future and has been established as a to-do by major retailers. While it may sound like a big deal for some small to mid-sized businesses, with the right strategy, free shipping can change your sales game. When applied to high-margin products or for specific periods, free shipping can improve your bottom line.
Steal These Free Shipping Copy Templates
1) Yay! You’re 40$ away from getting FREE SHIPPING
Add more products to the cart
& get 10% off on your next order.
2) Free Shipping, Free Returns* & 30% on Your First Order
Apply Free30 during checkout.
3) It’s the day you have been waiting for!
Today is December 14, 2022, which means it’s National Free Shipping Day.
To celebrate, you can avail of free shipping
across product categories on carts above 80$.
4) Pocket-Friendly Products with Free Shipping
Accessorize in Style, with Free Shipping
Conclusion - Test Your Free Shipping Nudges
Free shipping can drive conversions if implemented correctly. Testing makes sure you execute free shipping nudges that drive profits.
You can A/B test
- free shipping nudges
- free shipping methods
- free shipping thresholds
If you found this guide and examples useful, then share the article with your team and implement successful strategies.