Author: Jen Pollard, Digital Analyst

It’s human nature to feel good about getting something for nothing. Nothing else in the eCommerce space represents this more than free shipping. 

Amazon was the first to offer free shipping back in the early days of online selling, morphing into the Amazon Prime subscription many of us pay for today. Since the book-selling behemoth branched out and grew to the largest marketplace on the planet, many other businesses have co-opted the strategy, drawing in customers to spend more with them. 

Extra fees at the checkout are certainly up there with one of the biggest factors causing basket abandonment. As much as we might say we like surprises, this is usually a surprise that isn’t welcomed by shoppers. Offering free shipping can be a surefire way to get people to click the pay now button. In a 2020 survey conducted in the US and Europe, researchers found that 50% of shoppers cited extra costs at checkouts as the reason they didn’t make a purchase, for European shoppers the percentage jumps to 65%. 

It would be fair to say that many shoppers expect free shipping after a certain spending milestone, such as orders over £100, £50, or depending on the sector, even as low as £30. Another strategy is to follow up abandoned baskets with a free shipping offer, but all of these are costs that have to be absorbed into the business. Although, this is a cost that can definitely seal the sale with online shoppers.

Free shipping in consumer psychology 

The psychology of free shipping usually finds shoppers falling into three camps. Those that will add more to their cart to get over the free shipping threshold, and those who will go elsewhere to a site that offers free shipping, even though they’ll be paying more for the actual product. Finally, shoppers will abandon the basket and not purchase the item they were originally looking for. Combatting each of these behaviours requires an approach that balances costs with customer expectations. 

Another perk associated with free shipping is free returns. This truly came into its own over COVID, when shopping went fully online. Shoppers ordered multiple items in different sizes and colours, and would expect to be able to return the products they didn’t want for free. Many of these items were deemed not fit for resale, and ended up in landfill. “Reverse logistics” or the operations around receiving, processing, and relisting returned items is generally inefficient, labour-intensive, and more expensive than it’s worth. This has led to retailers like Amazon and Walmart to offer refunds without returned items in some cases. 

The ultimate delivery dealbreaker

For smaller online retailers, free shipping is a problem, often lacking the resources to sustain and absorb the costs of free shipping and returns. However, for many shoppers, this extra perk is the ultimate dealbreaker. Finding a balance can be difficult, but free shipping thresholds or multi-buy offers can help bring sales up to meet customer demands. 

The price of cardboard, labour costs, logistics, customs, energy, and taxes on non sustainable shipping practices have all played a part in raising the costs involved with delivering free shipping. But solutions are out there, such as providing returnable packaging, self-locking boxes to replace excessive tape, and thinking about economies of scale when ordering a certain box size you use the most can all help bring overheads down. 

With the expectation of free shipping now commonplace, retailers are finding it difficult to retain or increase their conversion rate. The answer isn’t clear, but not providing free shipping in some way to benefit your customers could leave you with more abandoned baskets, and an inevitable dip in sales. 

If you want to learn more about how to improve your checkout experience, and optimise your conversion rate for more sales, then speak to our CRO team at Visualsoft.