03 January 2023
According to a 2021 Consumer Trends Report, 80% of consumers expect free shipping when ordering above a threshold, and 66% of consumers expect free shipping for all online orders. And when it's not offered? Most of them just walk away.
Free shipping is a great sales booster and there's many ways to offer it. When not feasible for all products, free shipping should be included at least when ordering a certain dollar amount of products. Let's take a look together how much data suggests that free shipping can skyrocket conversions!
According to Walker Sands Future of Retail 2019 study, free shipping reigns as the most important option for the sixth year in a row (77%). In addition to free shipping, 48% of the consumers listed free returns and exchanges as an incentive to shop online more, and 39% percent listed one-day deliveries.
Based on 48 different studies containing statistics on E-commerce shopping cart abandonment, data suggests that shipping fees are 48% of times the main reason why shoppers abandon their carts. The same source also shows that the average cart abandonment rate is 69.8%.
With these numbers in mind, data suggests free shipping strategy has the potential to increase sales by up to 33.12% only by reducing checkout abandonmnents.
In Shippo's Ultimate E-commerce Shipping E-book, data shows that 48% of customers will increase the volume in their carts in order to meet free shipping thresholds. If your customers are already in buying mode, offering free shipping for a minimum purchasing threshold is an efficient method to incentivize buying more products.
We recommend setting the free shipping threshold to be slightly above your average order value or above your median order value, in order to nudge customers to spend a little more for free shipping.
According to ebay's Fast Facts Press Release from Q3 2020, 70% of products were shipped for free (reflects US, UK and DE). On ebay, buyers qualify for free shipping if they spend over $25.
Since the sellers have to pay the shipping costs themselves, some sellers decide to incorporate the shipping cost into the product price.
Free shipping is the second most commonly cited reason why people subscribe to Amazon Prime, despite the fact Amazon already offers free shipping on most orders above $25.
In the past, Amazon tried to increase the free shipping threshold by 40%, from $35 to $49. However, the company reversed its decision just months later. In May 2017, Amazon decided to further lower the free shipping threshold down to $25, the same price it was before 2013 and where it currently stands.
Offering free shipping means you'll have to pay it out of your own margins or to increase the product costs to cover the shipping. But if done right, absorbing this cost can have a huge pay-off!
Our main recommandation to offer free shipping is through minimum order values, but there are other several methods which are proven to work, such as:
Adding the shipping price into your item cost: while your product may become less competitive, the dea of "free shipping" could still attract more buyers to your product page.
On certain items: higher margin items may be more suitable for free shipping.
As a one-time promo code for free shipping, to gain new customers or newsletter subscribers.
At certain times of the year: you could offer free shipping as limited-time promotions to drive conversions and bring new customers, while avoiding to pay for free shipping all the time.
Each store is an unique story, and only looking at data of what other stories are doing is not always enough to suggest highly effective improvements. At Flowpoint, we track and understand your customers' behaviour so we can suggest more revenue generating opportunities for your website.
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