Does free shipping increase sales?
What’s the one-word people go crazy over?
If you said “sex”, you’re a pervert. Kidding, it’s a good answer.
That was actually most of my team’s answer when I asked them.
I work with a bunch of perverts.
But many people would say “free”. Being told to use the word ‘free’ is one of those things you start to hear over and over if you study marketing.
There’s no doubt it has a powerful effect.
But the question is…
Is it good?
Or bad?
The truth: the studies show both.
Let’s dive in and explain.
The Weird Stuff People Do When Something is Free
The magic of free is no secret. Dan Ariely, a behavioral economist, writes about a few different studies in his book Predictably Irrational.
Most of the studies are about what people do when given two options. One choice makes more economic sense, but it’s often not what people actually chose!
One study was about two gift card choices: They could either have a $10 Amazon gift card for free or a $20 Amazon gift card for $7. Guess which one they chose?
The free one! Even though the other choice provided a mathematically better value.
Let’s talk about how this works on a massive scale online.
Does Free Shipping Increase Sales?
When a Whole Country Acts Like Humans Should
Chris Anderson wrote about an entertaining case study in his book Free.
When Amazon made the industry shattering choice to start offering free shipping…sales went up everywhere.
Well, except for one place.
France.
Okay, France gets picked on a lot throughout history. But what’s wrong with France?
Do they just love paying for shipping?! Not at all.
Here was the difference – the Amazon branch in France decided to charge 20 cents instead of free shipping. Come on, 20 cents is basically free, right?
But it made all the difference in the world.
Once they changed it to free, sales shot up just like the rest.
There are three things that you can be sure of in this life: death, taxes, and charging shipping to kill your conversions.
Charging shipping used to not be a big deal. But now everybody ships for free. Why?
Everyone is competing with Amazon. Once they made free shipping ‘their thing’, it’s been hard for people to choose to shop anywhere else.
Research from the University of Pennsylvania showed not having free shipping will make your customers run for the hills. Conversely, free shipping in some form is a hugely successful conversion booster.
And if you’re still not convinced, Accent published a study that shows 88% of consumers would be more likely to shop at an online store if they were promised free shipping.
Another study shows more than half of your customers will abandon their carts because they were hit with unexpected costs like delivery charges.
Making it happen in your Shopify store
Does free shipping increase sales? ABSOLUTELY. And if you’re not currently offering free shipping on Shopify, find a creative way to offer it.
But…
Offering free shipping is a fine line to walk, as shipping can come at a costly price to you as a merchant. But these costs can be absorbed with a threshold…
Free shipping threshold
People will buy more stuff to get free shipping
Here’s a helpful case study from e-commerce store NuFace, they tested adding a free shipping threshold and it increased its orders by 90%.
They simply placed a “free shipping over $75” slogan above the “Shop NuFace button” – an intelligent move, which took into account where the target customer would be looking on the page and placed the incentive near it.
The research also showed approximately 60% of e-commerce store owners cite free shipping with a threshold as their most successful marketing tool. This makes total sense because a lack of free shipping is the top reason consumers abandon their online shopping carts.
And this backs up my experience of setting the threshold slightly above your current average order value (AOV). So, if your AOV is $40, offer free shipping for orders over $49.
And to prove this works, one of the many findings in a joint study by Harris Interactive & UPS was that 39% of customers reported they’ll often purchase enough to qualify for free shipping when there’s a threshold to meet.
When you set a threshold, it typically increases your average order value because shoppers will buy more items to reach your threshold.
Or in other words, sell more stuff to each customer you get.
Making it happen in your Shopify store
Well, there are a lot of Shopify upsell apps but most only pretend to do a good job.
They usually come with a major drawback.
The problem with most so-called upsell apps is that although they can increase your average order value, your conversion rate often suffers because they rely on annoying and often buggy pop-ups.
Sure, they help bump up your AOV but the distraction of a pop-up usually lowers your overall conversion rate.
This unintentional side-effect means overall, you may well be worse off than you were without the upsell pop-up.
But it doesn’t have to be this way.
UpliftHero routinely cross-sells products to your customers without interrupting their user experience or the checkout flow.
UpliftHero also rewards and incentivizes your visitors to add more items to their cart by leveraging your Shopify free shipping threshold.
All this means a massive increase in AOV without sacrificing your conversion rate, plus reduced cart abandonment compared to other apps.
And to make sure your cross-sells get maximum exposure, UpliftHero cleverly places them immediately under your Add-to-Cart button—just where your visitors’ attention is focused when they’re ready to buy.
You can find out more here and get a 14-day free trial.
Does Free Shipping Increase Sales? Even more with a free gift with purchase –
How society’s rules create brand loyalty
When you go out to dinner with someone, be it a friend or a family member, and they try to pay for your meal. What usually happens? Well, if you’re not a deadbeat, you usually try to put up a fight and offer to split or even pay for them.
Why is this? Even though it goes against the basic economic principle of “collecting the most resources?”
Well, it’s because we’re human. We have emotions that stir up in those situations.
It’s the power of reciprocity. You do something for me and I feel obliged to do something for you.
This is can be effective in e-commerce as well.
“Free gift with purchase” offers to give buyers another reason to buy which means an increase in sales for your Shopify store. Not only that, it can even create and increase brand loyalty.
Okay, but how effective can it be?
Nearly 90% of free gift receivers said they were “somewhat likely” to buy more frequently from an online store after receiving a gift, according to new survey findings from Harris Interactive.
Additional survey findings include:
- 65% of free gift receivers said they were at least somewhat likely to share their experiences with others online;
- Online stores saw value in including a free gift with customer orders, though less than half provide one; and
- Of the four out of five Americans who are at least somewhat likely to share their experiences with others in person about an online store after receiving a free gift with purchase, women significantly are more likely to share their positive experiences than men.
Making it happen in your Shopify store
What can you include in orders that have legitimate value to a customer but a relatively low cost to you?
Be creative. It could be a digital companion guide to a product. Or a low-expense item that’s a natural addition to their product purchase.
Be spontaneous. Do it without even letting them know. The best gift can be the one that isn’t expected.
Be realistic. Consumers aren’t stupid. Nobody wants a free bumper sticker promoting your brand.
Be genuine. Offer something with value to the customer and give your reasoning to the customer. It will add to the buying experience fostering that desired brand loyalty.
Buy One Get One
The new kid on the block in the marketing world is the idea of the “Buy One, Get One Free” offer. Sometimes it is “Buy One, Get One 50%”.
No matter the specifics, they do one thing well – sell stuff.
BOGO is designed to clear inventory that has been sitting around but at a price that you can still make a profit off at a margin above 50%.
Understand that Buy One, Get One Free isn’t the same as “50% off all merchandise”.
The point is to allow someone to buy an item that may be a 50% margin item (you break even) and then they get another item that may be at a 70% margin (you net 20% margin on a sale you otherwise wouldn’t have made).
If you sell items at more than 50% markup, this could be an excellent way to make extra sales.
How about from the customer’s point of view?
Well, there are multiple reasons that Buy One, Get One Free is worlds better than 50% off.
First off, when something is heavily discounted, what’s your first reaction?
Is it broke?
What’s wrong with it?
Why are they trying to get rid of it?
Is it going to fall apart?
Do I even need it?
Our brain instantly devalues the intrinsic value of something simply because our perception of the item has changed due to pricing.
However, when we Buy One, Get One Free…magic happens…
Holy cow! All I have to do is buy one and I get the same full-priced item for free?!
Huffington Post summed this up accurately:
“In 2012, The Economist published a post titled, Something Doesn’t Add Up“.
In it, the author explained that researchers from the Carlson School of Management at the University of Minnesota conducted an experiment to learn more about how consumers reacted to discounts and freebies.
The conclusion was, “Shoppers… much prefer getting something extra for free to getting something cheaper.” Sadly, the explanation for the behavior is less than flattering. “The main reason is that most people are useless at fractions.”
As emotional creatures, people are more inclined to accept free offers than discounted ones. The results speak for themselves. “The researchers sold 73 percent more hand lotion when it was offered in a bonus pack than when it carried an equivalent discount.”
Whether they are right or not, shoppers believe they get a better deal when they walk away with something for free instead of spending less on their overall purchase.”
Are you starting to see the difference in the perceived value of an item based on pricing?
Making it happen in your Shopify store
There’s also a great spin that you can add to this concept. If you sell a product that allows for variation like a T-shirt (colors and sizes) you can offer the customer a free gift if they buy two if the original item.
Our Shoptimized™ Theme has the option to do this for you auto-magically. Plus, it’s the highest converting Shopify theme.
Does Free Shipping Increase Sales? What About Paying Only for Shipping?
Free + Shipping Offers
Just pay shipping, the new way to get customers
These kinds of offers are also referred to as “tripwires”.
Your tripwire needs to have a super-low barrier of entry and be an impulse buy. Anything that purchasers have to deliberate over won’t work.
And as with any product you’re selling, whether it’s free or full price: the easier it is to understand and explain, the easier it is to sell. Don’t try and sell something people don’t know they need.
Not only that but your offer should appeal to an “irrationally passionate audience.”
The point is to get as many people who may be interested in your products to put their money down and begin their journey with you.
What journey is that exactly? Why your sales funnel of course.
This is the natural progression you want your customers to take where the more value you give them, the more they pay you.
Think about it, if the product is too broad in its appeal, it’s harder to make the funnel profitable because the core product you’re leading into isn’t aimed at a niche audience.
Making it happen in your Shopify store
A big mistake many Shopify store owners make with their ‘lead-in sale’ (also known as a tripwire) is charging a premium price for the shipping to avoid losing money on the front-end sale.
Remember, shipping costs leave a bad taste in your customers’ mouths and blow the sale altogether, or at least mean you’ll never get repeat business. So don’t make it an unrealistic amount.
The better way is to offer reasonable shipping costs and then turn the loss into a profit with an immediate cross-sell or upsell. This can be done either on the checkout page or post-checkout once you’ve secured the initial sale. This way, your average order value shoots up and you’re in profit sooner and you can afford to spend more to acquire a new customer to stave off your competition.
Wrap Up
Does free shipping increase sales? The lesson here is the power of free isn’t going away any time soon.
Has it been abused time and time again by snake oil marketers? Yes. Are people more skeptical of it? Yes. But it’s still effective.
Maybe you’re left wondering how you can implement these enticing word choices like ‘free’ into your Shopify store without having to make a bunch of changes and edits…
The Shoptimized™ Theme is one of just a few high converting Shopify themes and has a built-in free shipping threshold bar that entices customers to add more to their cart to get free shipping (proven to be one of the most powerful motivators in e-commerce).
Our app, UpliftHero also rewards and incentivizes your visitors to add more items to their cart by leveraging your Shopify free shipping threshold.
Check it out and increase your sales today with the ridiculously effective power of free.
