Does Free Shipping Increase Sales?
Free shipping!
Shoppers love to see those two words on an online store and its products. It’s an incentive for them to complete a pending purchasing process. They go wild with excitement knowing they have one less thing to pay for.
But is free shipping good for your eCommerce business? Is it profitable and does it increase your sales?
The answers to both questions depend on a few factors. Here, we look at:
- What offering free shipping entails.
- How to boost sales from it.
- How to pay for it.
- When to offer it.
Is It Better to Offer Free Shipping?
Free shipping is a marketing method used to eliminate customers’ shipping charges for approved purchases. That’s its simplest definition.
However, there are different kinds of variations to consider, including free shipping:
- With no limitations or qualifications needed.
- After a minimum amount threshold has been reached.
- For members of a club or community only.
- For specific products.
- Promotions during a specific period of time.
- Sent directly to a brick-and-mortar store.
- And many more different combinations that eCommerce professionals can think of.
This eCommerce method is used because of the psychological benefits it presents to customers.
Within our own eCommerce Fuel community we often have conversations around the merits of offering a free incentive to customers. Here is a question from the forum:
After moving to a new shopping cart this year (Bigcommerce from Prostores), I now can see new statistical information and the “abandoned cart” statistic of 85% worries me (it’s about 15-25% higher than the studies I’ve seen). I’m considering “free shipping” (i.e. building in shipping costs to the selling price) to alleviate this.
Statistically, my shipping costs are 18.25% of the price the customer pays out the door. So say a simple price increase of 20% on everything will allow me to offer “free worldwide shipping”. This will likely be a boon to my international buyers as my bulky widgets are expensive to ship and them not seeing that cost could help. Sounds like an interesting and simple experiment, but I’d like to know what the experience has been for folks in this forum that have tried this out.
And the first answer in the forum conversation from a long-time member:
We offer free shipping for domestic and free with minimum order for international. Our products are small and light, and we ship USPS FCM for 97% of our orders. Free shipping for us was a no-brainer, once we realized we could ship the average order for $1.93 + a padded bag.
As a small brand in a multi-$billion sector, we need to remove every obstacle to conversion… free shipping, free returns, no-questions-asked return policy, etc… I can’t tell you that our sales increased with free shipping. I can tell you that if we didn’t offer it, we’d be out of business, since all our competitors offer it… so to be competitive, I simply had to figure out how to do it cheaper. USPS FCM.
For access to the full conversation between members, either login or learn more and apply for membership.
The Psychology of It All
For free shipping to be effective, it has to be applied at the right point of the purchasing cycle. Every shopper who visits an online store is at one of these points:
- Realization: knowing that they have to fill an emotion or a need by making a purchase.
- Interest: seeing how your product meets their need.
- Knowledge: learning more about the benefits and characteristics of your product.
- Decision: they choose their favorite product to fill their need after comparing a few options.
- Buy: finalizing the purchase and becoming return customers.
The fifth point in the cycle, ‘Buy’, is where the free shipping technique adds value for a customer. Once they’ve decided to buy, you can remove the thought of risks by using the term ‘free’. But if they’re not at that point and aren’t yet fully convinced by your product, free shipping will do little to convince them. Here’s why:
- If the potential customer is at the realization stage, they’re still figuring out what their need is. Free shipping won’t get them excited if they even don’t know whether to shop or not.
- If they’re at the interest or knowledge stages, they’re still evaluating their options. They won’t buy something they’re unsure of just because it has free shipping. That would be careless.
- If they’re at the decision stage, they can choose to buy the best product in that moment regardless of free shipping. This will boost their confidence in their choice. Finding out that free shipping is offered is one more added bonus that makes them feel good.
Customers may have to go through each stage of the cycle and be in a buying mood. And there’s no better time of year for them to find the buying spirit than during holiday seasons.
The Stats Backing Free Shipping
Shoppers love free shipping and that’s more than just an assumption. It’s a fact backed by research from different organizations.
Many sellers offer free shipping because customers say they want it. In fact, 73% of online shoppers say that free shipping is what they want to see at checkout.” – FedEx
- Online shoppers prefer the cheapest shipping option 2/3 of the time.
