Free Shipping: Pros, Cons, and Should You Offer It?

Is Offering Free Shipping Right for Your Business? Pros, Cons, and Key Considerations

Should your business offer free shipping? It’s a question many eCommerce brands grapple with, especially as customers grow increasingly accustomed to the convenience of free delivery and returns. While the benefits of free shipping are appealing, there are also drawbacks that businesses need to consider. Let’s dive into the pros and cons to help you decide if offering free shipping is the right move for your brand.

The Benefits of Offering Free Shipping1. Customers Love It

The main advantage of free shipping is the positive impact it has on your customers. Studies show that 93% of consumers prefer businesses that offer free delivery over those that don’t. This trend has grown rapidly, with 75% of online shoppers now expecting free shipping on all orders, regardless of value. Meeting this expectation can make customers more likely to shop with and return to your business.

2. Compete Against Physical Stores

While online shopping has many advantages, brick-and-mortar stores still offer the immediate satisfaction of “try before you buy.” Physical stores don’t have to deal with shipping fees, which can reduce purchase friction for consumers. By offering free shipping, you can level the playing field with High Street stores, allowing online shoppers to feel they are getting a similar hassle-free experience.

3. Increase Cart Size and Sales

One of the most effective eCommerce marketing strategies is to offer free shipping, particularly with a minimum purchase requirement. Research shows that 58% of buyers add more items to their carts to qualify for free delivery, while platforms like BigCommerce report that free shipping can increase average purchase values by up to 30%. This approach encourages customers to spend more, ultimately driving higher sales.

4. Gain a Competitive Edge

Brands like ASOS have set a precedent for free shipping by offering competitive delivery options, forcing other online stores to follow suit. If your competitors are already offering free shipping and you aren’t, you risk losing potential customers. On the flip side, if your competitors do not provide it, offering free shipping can give you a competitive edge, helping you stand out in search engine results and build a loyal customer base.

The Drawbacks of Offering Free Shipping

1. It Can Impact Your Profit Margins

The most obvious drawback of free shipping is the cost. Unless you account for shipping fees in your product prices, you’ll be absorbing those costs, which can significantly impact your revenue. Free shipping can be sustainable if you have a large order volume, higher average order value, or increased pricing. But without careful planning, it can be a costly gamble.

2. Risk of Raising Product Prices

To offset shipping costs, some businesses increase product prices. However, this may make it difficult for smaller companies to compete with larger ones that can afford to offer low-cost or even free shipping due to economies of scale. Bigger brands benefit from reduced shipping rates and can distribute these costs across a wide range of products, leaving smaller businesses at a disadvantage.3. Changes in Customer Behavior

Free shipping can influence customer behavior, leading to more impulsive shopping. While this can boost sales volume, it may also result in smaller, less profitable orders. Customers may feel less inclined to bundle purchases to save on shipping, increasing order frequency but lowering overall profitability. Shipping fees can encourage larger, consolidated orders, which may lead to fewer returns and higher profit margins.

4. Higher Return Rates

Another downside is the potential for higher return rates. When customers face no financial risk, they may be more likely to make purchases they are unsure about, leading to an increase in returns. Covering the shipping and return costs can be a financial burden for businesses, especially if the returned items are not resellable.

5. Impact on In-Store Sales

If your business operates both online and offline, offering free shipping may draw customers away from your physical stores. Online shopping offers more convenience, variety, and sizes, along with the appeal of no shipping fees. While this is great for online sales, it can harm your in-store presence unless your physical locations offer unique selling points, like exclusive in-store promotions or personalized services.

6. Environmental Concerns

Are you focused on sustainability? Free shipping often results in an increase in orders, which can lead to more packaging waste and higher carbon emissions from shipping. If your brand is built around eco-friendly values, offering free shipping might conflict with your brand’s principles, especially if it leads to more frequent, smaller deliveries.

So, Should You Offer Free Shipping?

The decision to offer free shipping depends on several factors, including the size of your business, competition, and the types of products you sell. Here are a few strategies to consider:

1. Set a Minimum Order Value: Encourage customers to add more items to their cart by offering free shipping on orders above a specific amount. This can help boost your average order value.
2. Offer Free Shipping on Select Products: To minimize the financial impact, consider limiting free shipping to best-selling or high-margin items.
3. Incorporate Shipping Costs into Product Prices: If your customers are sensitive to shipping fees, consider adjusting your product prices to absorb some of the shipping costs without appearing too expensive.
4. Seasonal or Promotional Free Shipping: Use free shipping as a promotional tool during peak seasons or sales events. This approach can create a sense of urgency and drive sales without the long-term financial commitment of year-round free delivery.

Conclusion: Balance is Key

Free shipping can be a powerful tool to drive sales, increase customer loyalty, and compete with other brands. However, it’s essential to weigh the benefits against the drawbacks carefully. Free shipping might not be the best option for every business, but with the right strategy, you can make it work to your advantage.

At DigAptics, we can help you craft the perfect shipping strategy for your business. Whether you’re considering free shipping or looking for other ways to optimize your eCommerce strategy, we support you. Contact us today to learn more!