Take a moment to think about yourself as a customer. When you find a product you want to purchase and you find out there's free shipping, you have that added incentive to buy, right? You have that little burst of excitement and you're encouraged to get your wallet out. However, there are things to consider before you offer free shipping. Yes, customers can be enticed to buy with the offer of free shipping but you should be smart about it. 

In this blog, I’ll detail when and how you should offer free shipping, whilst also providing suggestions on things you should consider before you offer free shipping, some interesting shipping stats you need to know, and much more.

When should I offer free shipping?

To answer the ultimate question ‘should you offer free shipping,’ you’ll need to do some maths and a little bit of research. Don't panic! What I mean by this, is that you need to know if you can afford to offer free shipping, if it's sustainable for you, if it is essential for your customers and whether or not your competitors make this offer on their products. You can find below the key things you need to cover before you offer free shipping.

Things to consider with free shipping

• Free shipping might increase sales, but it could kill your profit margin

According to Invesp, 9 out of 10 consumers say free shipping is the top most incentive to shop more online. Before diving in, you need to figure out whether it makes more sense to absorb the cost of shipping or raise your product prices to cover all the shipping charges. Either option will have an impact on your profit margin, but it’s important to consider whether the long-term gains will outweigh any short-term losses. Think about it this way, is there life long value of any new customers you’ll acquire due to your free shipping offer? Is the ROI worth the upfront cost(s)?

• Could result in short-term and long-term gains

In the short term, offering free shipping can see an immediate boost online sales, leading to more orders and more profits. It can also lead to larger orders, particularly when businesses set minimum thresholds. And in the long term, you could find that yourself gaining loyal customers returning to buy your products because you offer free shipping. A large chunk of online shoppers will only buy from businesses and beyond any profit gained in the short-term, it’s important to consider repeat purchases and the overall lifetime value of those customers that you wouldn’t have otherwise had if it weren’t for free or discounted shipping.

• Staying competitive is key

Free shipping may be necessary to remain competitive. Unfortunately for many online stores, offering free shipping isn't a competitive advantage but merely a vehicle to level the playing field and maintain existing sales levels against their competition.

• Cost for programming and marketing of the free shipping services

Other costs involved with offering free shipping include programming and marketing expenses. Depending on your shipping offer, it may require a substantial amount of programming time by your IT department in order to make it function properly on your website. This may be something you do in-house or outsource but like anything, it comes with a cost. Additionally, while marketing your free shipping offer can lead to more sales, the costs involved with generating this awareness should be considered. The marketing costs include design and advertising expenses.

How can I offer free shipping to my customers?

Once you cover these points, then you can decide if you're offering free delivery or not. We advise that you offer at least one free shipping service, to offer that added incentive to purchase your products. If you decide you want to offer your customers free delivery but not sure how to, here are our 7 ways in which you can do just that.

7 ways you can offer free shipping

• Free shipping on everything

Some businesses offer free shipping on all orders, regardless of the items included or the overall value of the purchase. This is generally more viable for businesses with smaller, lighter weight products.

• Free shipping with minimum thresholds

Compared to free shipping on everything, this is a much more common and realistic tactic for any business. Setting minimum order value thresholds is a way to encourage larger orders and reduce risk. Think about the last purchase you made online, did they have a minimum order value to qualify for the free shipping, and did you buy something else just to qualify for it? I'll admit, I did.

• Free shipping on certain items

It’s common for businesses to offer free shipping only on certain items, those for which their margin is greater, and they’re able to easily absorb the shipping cost. This is commonly used for when businesses want to move quite quickly on a sale and need that added push to make the sale.

• Free shipping at certain times of the year

Many businesses choose to offer free shipping periodically, rather than all year round. Depending on your products, it is a good idea to test free shipping offers at certain times of the year, such as Valentine’s Day, Mother’s Day, Black Friday, Christmas etc.

• Free Shipping to Certain Locations

As mentioned, many businesses offer free shipping only to buyers in particular locations, for example the UK. Taking it a step further, some of the larger businesses are now offering free shipping to store, where customers can pick up the purchase(s) in-store as a tactic that can lead to purchases being made there as well.

• Free Shipping on Returns

If you’re a clothing business or footwear retailer, this one is particularly appealing for your customers. And if you have a high rate of returns, offering free shipping on those returning the item(s) should be tested and measured, as it’s very common and expected.

• Free shipping for loyalty

Some businesses provide extra incentive to encourage repeat purchases, such as offering free shipping to their loyal customers. This can be a great way to experience the longer-term gains of free shipping by increasing the lifetime value of your customers. After all, that's what you want to do, you want to look after your returning customers.

Testing different free shipping offers is key to finding the most profitable strategy for you and your business. These 7 methods are not the only ones you can consider and/or test. So do your homework, research your competition and compare, just as your customers will when they are deciding whether to buy from you or not. Get creative with it. In an online retail world where customers have an abundance of similar choices, the right offer could make all the difference. If you're considering offering your customers free shipping, follow the above points and consider everything in this blog, and you'll find what works for your business.