Free Shipping in E-commerce: Strategies to Increase Sales and Average Order Value

Customers highly value free shipping, with DigitalCommerce 360’s 2024 survey indicating that 81.34% of consumers prioritize it for order delivery. Is your business aligned with this priority?

By carefully planning, you can offer free shipping that resonates with customer values while maintaining profitability. This requires the right tools, strategies, and partnerships.

This guide will detail the advantages of free shipping, assess its suitability for your business, and outline implementation steps.

Free shipping benefits both customers and company stakeholders by allowing you to:

Keep up with the competition

Free shipping is common, with 74% of online retailers offering it in some form. Customers often expect it, so charging for shipping may put you at a disadvantage.

Drive sales and average order value (AOV)

Free shipping can increase sales, as only 44% of surveyed consumers paid for shipping in the past six months, while 73% completed transactions with free shipping. It also boosts AOV through order thresholds, with nearly half of customers spending more to qualify for free shipping.

Improve value perception

Free shipping enhances customer satisfaction, influenced by the zero price effect, where customers perceive higher value in free perks.

Considerations for offering free shipping include:

• Profit margins: Plan to offset shipping costs, possibly using WooCommerce Shipping for analytics.
• Logistics: Shipping costs vary by service, speed, and location.
• Eco-friendly shipping: Free shipping may increase orders and emissions; consider sustainable measures.
• Industry expectations: Free shipping may be standard in some sectors.
• AOV: If AOV is low, introduce a minimum purchase threshold.
• Return rates: Free shipping may increase returns, especially in apparel.
• Fulfillment partnerships: Use 3PLs or shipping software for discounts.
• International orders: Free shipping may be feasible domestically but challenging internationally.

Alternatives to free shipping include lowering prices. To manage free shipping costs, consider:

• 3PL outsourcing: It can save money and reduce shipping rates.
• Packaging changes: Use lighter, eco-friendly materials.
• Shipping rates adjustments: Recoup costs with paid options.
• Increasing product prices: Incorporate shipping costs into product prices.

Experiment with free shipping promotions such as:

Provide free shipping with a minimum order value

Set a purchase threshold for free shipping, like House of Malt does with orders over £99.

Offer free shipping as part of a customer loyalty program

Incentivize loyalty program membership with free shipping at key milestones. Use extensions like WooCommerce Points and Rewards.

Post Tags: #analytics#business#competition#partnerships#Shipping#woocommerce