Here’s a secret everyone knows but often forgets: free shipping isn’t free. Shipping companies, truck drivers and mail carriers all have to get paid, whether it’s by the customer receiving the package or the online store that mailed it. We all know that. Still, when a customer sees the word free, endorphins rush to their fingertips causing them to magically hit the buy button.

Okay, maybe that’s not scientifically proven, but there is plenty of evidence that free shipping attracts shoppers and converts them to buyers. So, how does any online brand absorb those “free” shipping costs without decimating their profit margins? Today we’re going to look at how important free shipping really is, and ways to make it more affordable for your brand.

How Important is Free Shipping Really?

You may think your online sales are doing just fine without offering free shipping, but let’s look at what consumers say, and what you might be missing.

• In a 2023 poll, 62% of shoppers said they wouldn’t consider purchasing from a retailer that doesn’t offer free shipping; 35% said they prefer free shipping, but it wasn’t a deal breaker.
• The same poll found that only 10% of online shoppers wanted same or next-day delivery in 2022, down from 18% in 2021.
• Multiple polls show that consumers prefer free shipping over fast shipping. In a 2022 Digital Commerce 360 poll, 76% of consumers ranked free shipping as one of the three most important factors when shopping online, while only 43% put fast shipping in the top three.
• Not everyone expects next-day delivery, but 90% of customers say 2 or 3-day delivery is the baseline expectation.
• Consumers are willing to make concessions to get free shipping. 42% say they’d be willing to join a loyalty program, and 47% said they would spend more to meet a minimum threshold.
• The average ecommerce shopping cart abandonment rate is 70.19% according to an exhaustive 2024 study by Baymard. When they excluded the consumers who said they were “just browsing,” the next biggest (48%) reason for abandonment was because the extra costs (shipping, taxes, fees, etc.) were too high.
• 41% of online retailers report that shipping costs are their biggest challenge, yet nearly 75% offer free shipping.

Clearly, free shipping is both important and expensive, yet 75% of online stores offer it in one form or another. We know it’s doable, it’s just a matter of figuring out how to make it work for your brand.

Ways to Make Free Shipping Affordable

The numbers above hint at several ways to absorb or reduce shipping costs and make offering free shipping more affordable. Here are some of the ways online retailers are managing it.

Require a Minimum Order Value

Of the 75% of online retailers that offer free shipping, 45% of them require customers to reach a minimum order value (MOV), a.k.a. purchase threshold, to get the perk. It will require some math and market research to find the magic number for your brand. First, calculate your average order value and average shipping cost per order. Set your MOV slightly higher than the average order value, but not so high that you lose customers. Look at what your competition is doing, and test different minimums to find the perfect MOV.

Slow Your Roll

If consumers care far less about delivery speed than they do about getting free shipping, then why not offer free shipping on your slowest, most affordable shipping method? You don’t have to offer fast and free, just one or the other. Let the customer choose which is more important to them.

Distribute Inventory

Splitting your inventory across multiple fulfillment centers around the country reduces shipping distances and costs, while also increasing delivery speeds. It’s a win-win-win. To make this easy, look for a 3PL that manages its own fulfillment centers, so you’ll have one centralized system for tracking orders and managing inventory.

Limit Free Shipping to Special Customers

Offer free shipping to first-time customers, to increase repeat purchases, email or SMS subscribers, or social media likes. Or start a loyalty program that offers unlimited free deliveries for one low annual fee.

Limit Free Shipping to Special Time Periods

If 70% of your sales happen during peak holiday season, then maybe it makes sense to limit free shipping to that time period. Or perhaps it makes more sense to offer it as an incentive during slow sales periods, or special short-term promotions.

Raise Prices

While your customers may not like a price increase, they also don’t like the bait and switch of a low-price followed by a huge shipping charge. Do your research and find that happy place where your price isn’t too high to discourage shoppers, and you can offer free shipping while still earning a decent profit margin.

Negotiate Better Shipping Rates

It’s tough for a single ecommerce business to negotiate better shipping rates. That’s why many turn to a third-party logistics and fulfillment partner like ShipMonk to handle their order fulfillment and shipping. Shipping companies love us because we process and ship tens of thousands of orders daily. We have so many shipping partners that our Virtual Carrier Network guarantees affordable 2-day delivery to anywhere in the continental US, as well as affordable standard and economy shipping options to the US and Europe.

Optimize Package Size and Weight

Your fulfillment center or 3PL partner can also ensure you’re using the lightest, smallest package and packing materials to get the order safely to its destination. That way, before you start negotiating rates, you know you’re not paying for unnecessary weight or dimensional weight pricing that could have been avoided.

Affordable Free Shipping Is Possible

With all of these suggestions, free shipping is within your grasp. All you have to do is find the option that works best for your ecommerce business. Need help with that? We’re here for you! Contact a fulfillment and shipping expert at ShipMonk and let us do the math to make free shipping possible.