Free shipping. To offer or not to offer? That is the question.
Intrigued by this ongoing battle retailers face, our Stitch Labs data scientists dove into our analytics to see what is common practice and what kind of results you gain varied by shipping offerings.
Mining data from more than 1 million US Shopify orders, our team investigated the outcomes of businesses with policies ranging from always offering free shipping to never doing so.
What did we find?
After weeks of research, our data scientists revealed findings that indicate a potential 10 percent increase in revenue when companies provide free shipping to customers.
Read the details below to identify which system you’re currently implementing and how you can benefit by testing new shipping strategies.
Free shipping all the time
A Forrester study found customers avoid paying for shipping at all costs, even if it means buying elsewhere. Despite this, we found that small businesses are three times less likely to offer free shipping than larger counterparts. Our data shows that retailers who always offer free shipping can directly increase revenue by 10 percent.
No free shipping
The data also showed that 33 percent of businesses never ship for free. This is most likely because the average total cost per order is lowest when companies never offer free shipping. However, the same Forrester study above determined that 65 percent of customers abandon shopping carts and 44 percent do so because of shipping costs, indicating a high negative revenue impact to choosing this option.
Free shipping sometimes
Most businesses strategically use free shipping based on a threshold, such as orders over $100 or when more than three items are purchased. In fact, nearly 57 percent of businesses use this shipping model because purchase levels help guarantee retailers a return on investment from offering free shipping.
Are you for or against free shipping as a retailer? Have you discovered any revenue growth from either one? We’d love to know your thoughts!