Free shipping vs. paid shipping — Does it make a difference? | Acro Media
Preston Pilgrim


Preston Pilgrim

, Guest Writer

Posted in Digital Commerce

October 31, 2016

Free shipping vs. paid shipping — Does it make a difference?

Free shipping can have a significant impact on your business and is starting to become the norm with popular ecommerce brands. With more and more brands offering free shipping as a part of their strategy, it has become an expectation for customers to receive free shipping when they shop online.

Here are a couple of reasons why free shipping MIGHT be right for you.

1. Free shipping may increase sales and your bottom line revenue

gettyimages-523964361.jpgPeople love free shipping. Knowing this, we can assume with everything else being equal, if you are selling similar products as your competitors and you don't offer free shipping and your competitors do, I'm sure we know who the online shopper is going to choose.

The only time online shoppers will pay for shipping is for the speed of delivery. Some people want fast shipping and are willing to pay for it, but other than that, free shipping will always win.

It's a no-brainer as to why free shipping can increase conversions and sales. But if you want more solid statistics on how free shipping has helped other businesses increase sales and revenue, check out some of these studies.

Retailers who offered free shipping saw a 10% increase in revenue.Stitch Labs

2 Big Feet reported that offering free shipping increased site conversions by 50%Site Point

Another case study claimed that a free shipping offer had increased ecommerce orders by 90% Red Door Interactive

2. Free shipping can boost average order value

One of the most effective ways to leverage free shipping is by offering a threshold at which customers have to reach before they qualify to receive free shipping.

Example: Orders over $50 will receive free shipping.

There is a psychological aspect to this; people want to take advantage of the offer that is presented to them and are willing to purchase more items to qualify for the free shipping.

A study in 2015 from comScore and UPS concluded that 52% of American shoppers purchased more than what they intended just to qualify for the free shipping.

How to control free shipping costs

If you're a company that competes on margins and every dollar counts, here are some ways you can control your shipping costs and offer free shipping without breaking the bank.

  • Use fulfillment services — Using fulfillment services could potentially shorten the distance packages need to be sent, reducing the cost of shipping, even after the fulfillment fees are included.  This will be up to you to figure out if this is a viable option for your business.
  • Create Shipping rules per location — Another method you could use is offering free shipping for locations near your warehouse and then provide a minimum purchase amount to qualify for free shipping locations further away from your business. This way you can still offer free shipping to all of your customers, but different rules apply based on location.  

Free shipping problems are in your head

Many ecommerce websites have no problem offering 20—30% off coupons or paying $5 per click on their advertising campaigns but are not willing to provide free shipping to their customers because it’s just an extra cost to the business.

My suggestions are to test things out, see how offering free shipping can affect your business and if things workout, great and if they don't, go back to doing what you were doing before. You will never know unless you test things out.

Who knows, you might be the next success story who increased site conversion by 50% and average order value by 15% just by offering free shipping.