ShipStation is in the process of moving the user community forum over to help.shipstation.com so that it is integrated directly with our help center! This will provide our community with better access to help resources, an easier to navigate interface, and a direct post-to-support ticket pipeline for instances that require ShipStation Support resources.

This forum (forums.shipstation.com) will be closed after October 31st, 2017.
New? Watch our welcome video [here], which goes over the basics of logging in and participating in the forums. Then, check out the [Rules] and our [video] about the features of the forum.

Is Offering Free Shipping Worth It?

erikaerika Moderator
A Keeper of the Keys
I saw this infographic the other day and thought I'd pose the question here. Is offering Free Shipping worth it? In the comments, share what your experiences have been, we'd love to know!

image
(Click the image to make it bigger)

Is Offering Free Shipping Worth It? 87 votes

Yes
72%
63 votes
No
27%
24 votes
Tagged:
«1

Comments

  • wheatwheat Member
    An Apprentice
    There is no Yes/No answer. Your Poll needs a Maybe. It is always Maybe because it all depends on the size of your business and your margins and of course the size of the order.
  • erikaerika Moderator
    A Keeper of the Keys
    Yes
    @wheat, thanks for the comment! Which do you lean more towards; yes or no? Every question could technically have a "Maybe" answer, but then we'd get nowhere, right? ;)

    In your experience, has it been worth it when/if you've offered free shipping? Did you have to add stipulations (like "spend $X to get free shipping") to make it worth it, if it wasn't?
  • DuckcoDuckco Member
    An Apprentice
    Yes
    YES! If you are wobbly on that, your business is going to be left in the dust by your competitors.
  • wheatwheat Member
    An Apprentice
    If your product line is at least nominally unique (can't easily be found in the big stores) then there is no necessity to undercut reasonable shipping.
    We have products that we build shipping costs into - usually if they need to be shipped separately or something drop shipped. There are others where this is not appropriate. So if I am doing any leaning it is "Sometimes" and usually in conjunction with a specific dollar amount.
    As I said before, it depends on the margins. Historically only AT&T under regulation was ever been able to lose money on every transaction and still make the profit.
  • ronaldronald Member
    An Apprentice
    Free shipping is great for domestic sales! Even better for International! But its pretty impossible to give free shipping to internationals since different countries may require really different rates. eBay even required top rated sellers to make the switch to free shipping (Apparently for our benefit), but after looking at the data, it didn't help that much. But my international sales did increase... I'm not sure if they're being presented with the "free shipping" icon, but it seems to help!
  • trustNSRtrustNSR Member
    An Apprentice
    Yes
    I also agree that free shipping is almost always the way to go. I think its better already have the shipping cost factored into the price so that customers don't have to go to their cart to calculate what the actual cost will be (as the infographic pointed out). Then you can offer the expedited options for less money since part of the shipping cost is already accounted for.
  • WayneWayne Member
    A Usual Suspect
    No
    I voted No - but we prefer to offer the lowest possible prices on our products, and almost no one in our marketplace offers free shipping. If they do, their prices are very high already.

    We get complements on our shipping rates from our customers both domestic and international. We charge actual shipping plus $1 to cover our boxes and supplies. We do offer free shipping on a few things that are drop shipped directly from the manufacturer, but we only do this for specialty items that do not sell well. (We prefer to stock all items locally.)

    We ship ALL items in a box, never an envelope. We offer USPS and FedEx shipping as UPS beat up too many packages.

    In the past I have worked for places that used a mix of Free shipping and tiered shipping. The free shipping was triggered at a certain dollar value, as were all of the tiers. It worked OK, but you had to be careful, and you were never sure you were going to make money or loose money on a given shipment.

    For my marketplace and my business I prefer to let the customers pay honest shipping. This allows me to know exactly what my costs are and to offer the lowest prices on my products.

    When I shop online, I'm not looking for free shipping, I'm looking for the best price with the shipping calculated in. I think a lot of folks do the same these days. We are all tired of LOW prices with inflated shipping. I refuse to buy from a place with huge shipping charges. Lets face it, if you are reading this, you know what real shipping costs are.

    -Wayne

    p.s. We have found our customers like our honest approach to shipping and they tend to comment about that online in forums. :)
  • ReginaRegina Member
    An Apprentice
    Yes
    I can't wait to check out the infographic. (Thank you Erika!)
    I sell my handmade goods via etsy. And it seems like the other sellers (in my category-jewelry) on etsy, who do offer FREE shipping, seem to rock it in sales.
    I have been contemplating offering free shipping. But perhaps as a bonus, such as with as after order reaches $29. I will be experimenting this holiday season, (and post my findings on this delious new forum.) In today's economy, most seasoned shoppers are used to, and often come to expect, "incentives" to take them over the edge to make that purchase.
    ~Regina
    www.RADgiftsAndjewelry.etsy.com
  • AllofUsAllofUs Member
    An Apprentice
    No
    We originally started out with free shipping only to avoid the trips to the USPS. It's been so long ago that I don't remember why we had to take trips to the USPS (maybe int'l orders). I think we were using the USPS Click n Ship so the mail carrier could pick up directly at our house.

    Now, we only offer free shipping when a product is out of stock. In this case, the customer usually inquires when it will be back in stock and then I'll offer as a courtesy the free shipping coupon.

    Wait, backup...I do remember one reason I didn't offer free shipping because our cart (BigCommerce) was still behind the times and had not implemented it into the Admin.

    We offer high-end items that are handmade that a person cannot find in a store. These items are very light weight too. Therefore, we only use USPS to keep our shipping costs low ($2.50-$3.50ish). It does not make any sense to offer these products and charge our customer $8 or more to ship via UPS or Fedx. We get compliments all the time about our low shipping costs.

    But looking at everyone's points and the link provided, it is worth reconsidering. For First Class (even Priority) shipping, it is actually cheaper to offer the free shipping than 10% to 20% discount off a total purchase.

    Now, my wheels are spinning. :)
  • littlesaplingtoyslittlesaplingtoys Member
    An Apprentice
    Yes
    We offer free shipping on our teethers and ornaments (which is about 130 products) and a flat rate $5.95 on everything else. I've been happy with it and I'm open to changing it when it's needed. If all my shipping was USPS First Class, I would probably have free shipping for everything.
    The point about giving a free shipping coupon is a good one. I usually give a 10% off coupon, but customers do get excited about free shipping.
    The part on the infograph about customers putting items in their cart to calculate shipping made me realize that I need to figure out a way to clearly state our shipping policies on our site.
  • CharOuelletteCharOuellette Member
    An Apprentice
    No
    I voted no because our items are so expensive to ship. Tools are heavy. We weigh each item and try to figure the most reasonable way to ship to them, but sometimes there is a little overage, so what we do is refund any overage over a dollar back to the customer once the package is shipped.

    I hate to pay more then I need to for shipping and we don't want our customers to pay extra either.
  • littlesaplingtoyslittlesaplingtoys Member
    An Apprentice
    Yes
    @CharOuellette That brings up a good point as well; with some items customers are much more willing and ready to pay shipping fees in addition to the product cost. We purchase a lot of tools and that's the market, especially with larger purchases.
  • creektreecreektree Member
    An Apprentice
    Our vote would have to be Sometimes as well. We do offer free shipping on some items, but others are quite heavy. Some of those we do build the shipping into the cost, and offer free shipping, particularly when there is quite a bit of competition on those products. But for others, we seem to do better just keeping our price low and our shipping reasonable. We're still considering though, and will probably be making more changes.
  • kreischlkreischl Member
    An Apprentice
    Yes
    We are 100% free shipping with no minimum purchase. Our competitors start free shipping at $75 or higher purchase and I needed something to gain market share quickly. Another area to consider are the shopping comparison sites where free shipping is a checkbox for narrowing their searches. 50% of our sales come from shopping comparison sites.

    Thank you for the infographic.
  • kathleenkathleen Member
    An Apprentice
    No
    Free shipping is an interesting dilemma. I know customers want free shipping, but it is somewhat of a gimmick, as prices have to be increased to cover the shipping costs.

    If we offered free shipping we would have to boost the price of our products significantly. Also, as a manufacturer with direct website sales, offering free shipping would compete with our own resellers.
  • jmpartymartjmpartymart Member
    An Apprentice
    We are free shipping on everything we sell! All our prices include shipping costs, so if a customer purchase more than one of the same item...bonus for us! Example...

    Product "X" weighs 2oz and costs $1.64 USPS First Class Mail with tracking
    Product "X" x 2 weighs 4oz and costs $1.81, hence splitting the shipping cost to 90.1 cents per unit.
  • southerndutchsoutherndutch Member
    An Apprentice
    No
    Nothing is free. I know that a free shipping 'sale' that's truly temporary to boost sales may really be free, but with other stores, their prices are higher if they always offer free shipping. The exception to this is Amazon, who I think is responsible for making us all ponder free shipping in the first place. :) I'm a big Amazon buyer, and I'll always look for items on Prime before looking anywhere else. However, they have such a huge contract with UPS, their actual shipping charge is pennies on the dollar to what I pay on my UPS account. It's just not possible to compete without it being smoke and mirrors. If we both sell a set of dishes, I might be paying $9 to ship it and they might be paying $2 or $3. If all of my items were the same size or weight, or valuable, it might be easier. I can sell a $50 locket with free shipping, but I can't sell a $7, 1 pound bar of soap with free shipping. I would lose on every customer. Now if they bought 4 bars of soap, I could pack those in to a flat rate bubble envelope from the post office and ship them for $1.25 each. But if I'm selling both soap and lockets, I have a problem. That's just too many variables for a store that sells a wide variety of items.

    jmpartymart - that is a good bonus if you are looking for customers that buy 2-3 lightweight items. However, it's just as important that you cater to the customers that want 5-10-15 items. If they do price comparison, they will find cheaper options. We all need our customers with small orders, but the large orders are the bread and butter. If you can give them an incentive to spend more money and get something in return, you'll both win. :)
  • erikaerika Moderator
    A Keeper of the Keys
    Yes
    Great points, @southerndutch. I think that a lot of people have to go through that kind of process before they can determine if Free Shipping is worth it for them.
  • JRJR Member
    A Usual Suspect
    No
    This is a qualified "no"; it really depends on the marketplace and your competition.

    For example, if your marketplace offers a way to filter for "Free Shipping", than being included in this filter would be an incentive. On the other hand, if your marketplace doesn't make shipping costs evident or "above the fold" on the page, then there's less visibility and marketplace design supporting the idea of free shipping.

    In any case, you always have to do the math, you always have to check your margins. The old adage goes something like, "no amount of volume will make up for selling something for 99 cents that costs a dollar". As @kathleen pointed out, it is somewhat of a gimmick if it's free on all items as the cost burden simply shifts over to price.

    Incentivising a larger sale by having a threshold where free shipping can be had is something I'd like to test, experiment with, and measure, but currently my primary marketplace doesn't offer this (Etsy).
  • ZoomdweebieZoomdweebie Member
    An Apprentice
    I sure wish I knew the answer to this. We sell specialty tea in small packages, making shipping reasonably cheap for us--we can ship a 2oz pouch of tea anywhere in the US for less than $2. So we offer free shipping in the US. We USED to offer it to Canada too, back when the difference in postage was just a few cents. After a few increases, it's now over $6 to ship the same 2oz pouch to Canada, so we had to start charging them shipping, and we've lost business because of it--even though we are not charging the full cost of shipping. A lot of our customers take advantage of the free shipping to place orders of a single pouch of tea, which can be irksome--sometimes I wish we had a minimum order for free shipping or something--a $9 sale less $2 shipping less Paypal fees less product cost doesn't leave us much profit. This whole question has cost me a lot of sleep over the years. I sure wish I knew the right answer.
  • discountvialsdiscountvials Member
    A Usual Suspect
    The obvious answer (to me) is, like lunch, there is no such thing as free shipping. There are pricing and promotional methods to give the illusion of free shipping, but at the end of the day somebody, somewhere is going to pay one of the big 3 to deliver the order.

    The question seems easier at that point ... is it worth it, with the mindset of today's internet consumer (Note: your consumer may vary), to convince them that you are offering free shipping. I think it's an obvious yes. I agree with @jmpartymart, packaged and marketed correctly, free shipping can actually increase margin.
  • spoonpopspoonpop Member
    A Usual Suspect
    I found a good approach to this for my business damngooddoormats.com
    I charge full price for the first doormat, but offer $1 shipping on up to the next 4 mats in one order. It doesn't cost me much more $$ to increase the weight after that first 5 lbs & it encourgaes people to order in multiples!
  • gorillapapergorillapaper Member
    A Usual Suspect
    if your item is light,
  • GregKGregK Member
    An Apprentice
    Yes
    We have gone the route of order a certain dollar value and your order is free. This way a customer gets to choose whether they want to go with free shipping or not. If you make everything free shipping than, like others have said, the cost simply gets shifted to other customers. This way it truly becomes a free service to those select customers who have a need or want to purchase more.
  • Sean@333DFSean@333DF Member
    An Apprentice
    No
    We feel that charging for shipping is less "gimmicky" than offering free shipping.

    So we ran a test of our own...on ebay we listed an item 2 ways....one charging for shipping and the other with free shipping. Every aspect of the listing are identical with the exception of the shipping price. Both listing even come out the the exact same price to the customer. The listings have been running for over 1 year now....and to date the one with the lower price and shipping not included has sold over 100 more than the one with the free shipping.
  • APR@32A3EAPR@32A3E Member
    An Apprentice
    Yes
    @spoonpop‌ - that's a great strategy!
    @GregK‌ - we also do a "buy $(amount) get shipping free"

    We manufacture our own goods and have a healthy(ish) margin (compared to some drop shippers I've seen!). For this reason, we build shipping costs into product costs.

    When Free Shipping F@#($ng Rules for us!!!:

    International orders. Our formula for offering free shipping to international locales is: Customer gets free shipping if Order Total > 10X the cost to ship to that country. This encourages our international customers to stock up, and increases our regular reorder rate. This requires you to have a great knowledge of your actual rates and destination zones. Once your rates and zones are set up in your cart, most of the work is done for you.

    Domestic orders: We offer(ed) free overnight to orders $75+. This hinged upon our killer FedEx discount. We had 68% off retail rate and worked our packaging to the most minimal possible, which was Fedex envelopes. As long as the envelope bulges less than 1/2", you can bill at envelope rate and offer those crazy competitive offers.

    When Free Shipping Evaporates Our Profiability:

    We NEVER offer free shipping without a certain order total. We NEVER give free shipping coupons (our regular offers are already too good). If we do, we have either completely messed up and REALLY owe a customer because of some extenuating circumstance, or our cart is broken.

    When our cart is broken and customers use coupons AND get free shipping. This kills us. It kills any merchant. You can't run a charity, peeps! That's why you should always have multiple people to ALWAYS test your carts and offers, to make sure your coupons are working right and don't eat into your shipping.

    In the end, ladies and gentlemen, crack out your favorite spreadsheet softwares: Just make sure you clear Shipping Cost + Product Cost + Labor Cost with each order. Otherwise, you're running a charity and you won't be in business long.
  • Stephen@33FFAStephen@33FFA Member
    An Apprentice
    Yes
    This really isn't a YES/NO question. There is no free lunch, as they say.
    Obviously FREE has its potential marketing tool. As a consumer I love Free shipping, but as a business owner, know that the cost is wrapped into the price i'm paying. Total out of pocket might be lower at a site that offer 'reasonable' shipping.
    Closing the sale is really the key. One reason I use Amazon's FBA is their Prime shipping deals. These customers want quick easy shopping, with fast and free shipping. We can't get the discounts that Amazon uses, so I stock my products there and let Amazon make these sales, which I wouldn't have gotten anyway.
    How many times have you gotten to checkout and found shipping to be free, but a service charge to be added? Do you abandon your cart and run to the next 'free' shipper? if the service charge is less than $5? Less than $10?
    Our items are so variable (both in size/volume/weight and margin) that it's impossible to offer 'free' shipping and know our margin. We offer and promote 'actual cost' shipping. That means if you order a large voluminous item, all the small items will ship for free, since they fit inside.
    That being said, I have done tests and found for a particular item, FREE shipping always sells better.
    So Erika, I wavered toward Yes in your survey.
    For simple shops and simple shipping, it is probably much easier for the vendor to simply say FREE and not have a precise calculator in his shopping cart. So long your margins will cover it, then make the customer the KING.
  • WILLIAM@344C6WILLIAM@344C6 Member
    An Apprentice
    No
    not for me. i'm better off having LOW prices on merchandise, and LOW shipping rates. Easier for my combo of internet and face to face sales.
  • Erica@31452Erica@31452 Member
    A Usual Suspect
    It depends on the market place for me. On eBay, yes it's definitely worth it - your listings get promoted more and I definitely sell more.

    On Amazon, it doesn't seem to make a difference. I sell as much with a few dollars shipping as I do without! And there's no special extra promotion or anything either!
  • imgimg Member
    An Apprentice
    Yes
    Yes as a seller, we've actually increased (been i business only 12 years online through) our sales by 6% simply by offering free shipping. What we do is simple. $10 item + $6.70 to ship we charge $16.70 to $16.99 for it. Then when we do a sale, we raise the MSRP to $39.99 and reduce it to $16.88 on sale. Still making an extra $0.18 per item, and we sell thousands a day.

    Free shipping is a plus to the seller as Amazon Prime numbers show, and others, however it's a down fall to the customer since they end up always, always paying more.

    Shipping is NEVER free, it's never a gimmick, it's worked into the price. Perception is everything.
Sign In or Register to comment.