The phrase “free shipping” is music to a shopper’s ears. Suddenly, that cart full of purchases they were pondering seems so much more accessible. In fact, nine out of 10 shoppers named free shipping as the top incentive that would make them shop online more often. Offering deliveries gratis boosts conversions and customer loyalty. 
Still, as much as you’d love to offer fast free shipping under any conditions, there’s a cost associated with fulfillment. Can your online store realistically offer free shipping?
The answer is yes — with a price threshold.
Here’s how to choose a free shipping threshold for your online store to give your customers what they want, without going broke in the process.
Experiment with Thresholds.
The point of a free shipping threshold is to ensure your store isn’t hemorrhaging money on the transaction. It often persuades customers to not only convert, but to add a few items to their carts to reach the magic number.
Amazon recently reduced their non-Prime free shipping threshold from $35 down to $25 for five- to eight-day shipping. While they did so without much fanfare, one of their big competitors, Walmart, implemented a two-day shipping policy for orders of $35 and above. It just goes to show that thresholds aren’t set in stone—conditions change, and with them, fulfillment options.
How can you establish an initial threshold for your web store? Setting up an experiment is a great start. Surprisingly, a higher threshold does not always mean a better return. It’s up to you to find the tipping point. Kissmetrics outlines one test in which a store with a $100 threshold wanted to see if raising it would boost revenue. To do so, they set up experiments offering free shipping over $125 in version “A” and free shipping over $150 in version “B”.
Version “A”, with its smaller increase, boosted conversions, Average Order Value (AOV) and net profit per visitor better than version “B”. While version “B” did have a better margin per order, it convinced fewer people to buy.
Consider the Specifics.
No two online stores are identical. Turning an analytic eye on the specifics of your store can help you make a wise threshold decision. Evaluate these store factors:
- Profit margins
- Product size and weight
- AOV
- Customer location
If you’re shipping heavy boxes all over the world on a daily basis, it may not make fiscal sense to offer free shipping. But if you’re aiming to boost your revenues by a small bit and your margins are solid, you can set a threshold just above your current AOV to convince customers to top off their carts for the sake of free shipping.
Promote Your Free Shipping Deal.
Of course, offering free shipping above a dollar amount does little good if it’s a mystery. You want customers to know about your threshold before they head to your product pages; it’s a powerful motivator and can become part of an overall branding strategy.
Online stores using flexible ecommerce enterprise platforms to their fullest extent will design their store to remind the customer about the free shipping threshold well before the point of sale: a banner at the top of the homepage, written in eye-catching font on product pages and several times during checkout.
Your threshold may be $50 or it may be $500; it completely depends on what you sell, where you ship and where your current AOV stands. Experimenting is important in deciding how to choose a free shipping threshold for your online store. Once you do, advertise your threshold prominently and track its success over time, you’re likely to find an increase in your revenues.
