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The Complete Guide to Offering Free Shipping (and Still Make Money)

Mona 19 July 2021

The Best Blog Post About Free Shipping: How to Offer It, When is the Right Time and All The Answers You Need!

Free shipping is a popular topic. It's one that many people talk about and ask themselves if it's worth the cost.

Small businesses need to make a profit to stay in business. So before offering complimentary shipping it's best to weigh out your options. 

Whatever your shipping method, it's important to offer some kind of incentive for customers who are willing to pay a little extra to get their package delivered faster. 

Many e commerce businesses offer free shipping, but offers like this can be risky and costly if you're not prepared!

The How and Why of Free Shipping for Your Business

Is your business struggling to compete due to shipping prices from other online retailers? If so, you're not alone. 

Complimentary shipping is a great way to attract new shoppers and keep them coming back! 

Every business wants to provide their consumers with the best possible experience, but sometimes it's difficult to know how. 

One way that you can create a better customer experience is by providing complimentary shipping.

When should your business decide to start offering complimentary shipping? 

What are the benefits of offering free shipments for your online store? And what tactics do you need in place before you start giving away products as a promotional strategy?

Interested in learning more? Read on!

Who should offer complimentary shipping and how do they do it right now in 2021 to get the best results?

A complimentary shipping option might seem like a no-brainer, but the truth is that it's not for everyone.

One of the best ways to offer free shipping and keep your business running smoothly is by offering complimentary shipping in exchange for loyalty points!

The more customers you have, the less expensive each individual order will be which means you can afford to ship for free without taking too much of a hit on your profit. 

People are used to paying extra fees so if they know that their purchase will include some kind of bonus - even if it's just a discount coupon code - then they're more likely to make an online purchase from your shop instead of somewhere else.  

You should also provide people with as many shipping options as possible.

This means not only including complimentary or cheap shipping methods, but also standard and expedited courier service so customers can tailor their purchase to best suit what they want or need!

What does free shipping mean?

Free shipping means that the consumer does not have to pay any extra shipping costs. This includes the cost of processing the order and delivering it out to their door, or in store if they prefer that method.

How does it work?

One of the biggest myths about free shipping is that it's not 'free' at all. You're just giving your customers a discount on their purchase and absorbing any losses you might incur. 

Let's bust this myth by explaining how complimentary shipping works. When someone buys an item, they receive complimentary (or sometimes called "free") shipping at no extra cost to them.

This type of offer can work well for both buyers and sellers as you won't have to worry as much about returns or customer service dissatisfaction if something does go wrong during delivery since nothing was charged upfront.

Is complimentary shipping a good idea for your ecommerce shop?

If you're worried about the costs of returns or damaged products, then offering free shipping may not be right for you. But if that's not what concerns you, it could work well!

How can companies offer free shipping?

How a company can offer free shipping is based on their business model.

The most common way for a business to offer free shipping to their consumers is by adding the costs of shipping into their product prices, and making up the difference through either discounts or coupons.

How do companies offer free shipping?

Now, while the question above may seem like the one before, how a company can afford to offer free shipping, and how do companies (as in promote) their free shipping offers on their products, are two very different things. 

If your product margin and revenue can support free shipping and can help your end customer avoid shipping charges, then implementing a shipping promotion is a wise incentive. 

Whether it's get free shipping on all orders, or over a certain dollar amount or a minimum order value, sweetening the deal so to speak, is a profitable business.

Should I offer free shipping?

Should you offer free shipping on your online store or not - is a matter of digging deep into your revenue, profit margins and studying your shipping zones.

Note: All your customers care about is when they're going to get their products - not necessarily what it costs them.

Think of complimentary shipping as an investment in customer acquisition and retention, especially if you know that the majority of shoppers abandon carts because there are too many fees at checkout.

The best way to offer complimentary shipping on your website or store is through a product's price plus extra taxes and duties.

Some other factors entrepreneurs should consider before making a decision includes whether free shipping will affect profit margins, and whether it will detract from other aspects of the consumers' experience.

What are some ways to make complimentary shipping profitable?

The two most popular methods for figuring out free shipping is either adding a surcharge or charging per package delivered by weight.

But, if that's not possible then you can always charge small surcharges on top of the product costs when delivering orders over a certain weight.

When considering which route you want to go down with complimentary shipments, remember they have different impacts across various industries.

Offering complimentary shipping is not an all-or-nothing proposition. You can always offer to ship for free any product(s) that meet a certain threshold, such as an order over $100 in value or under 20lbs.

There are also some other perks of offering free shipping including the potential customer lifetime value, average order value and future sales conversion rate increases.

Do I need to worry about attracting unwanted visitors?

One disadvantage that people use as justification against offering complimentary shipment is that they're worried about new customers who will demand refunds after ordering their product(s).

This mentality fails to account for how many customers have abandoned their carts because they don't want to pay for shipping.

How will complimentary shipping impact my customer experience?

The free shipping experience will vary based on the online shoppers expectations.

For some customers, complimentary shipping is a pleasant surprise and they order in droves because of it.

Other times, when there are surcharges for fulfilment by weight or unexpected costs, that can leave your brand with both an unhappy customer and low margins."

6 Tips on how to offer free shipping and still make money 

  • Make sure that the price margin on your product is high enough or else you'll end up losing. Online retailers can drive more sales by offering free shipping! But, as you might suspect, shipping costs money and usually comes out of your product's price. The solution is choosing between different options on how to handle the expense.

  • Increase product rates so your customers cover the costs.

  • A business pays the full price of shipping from its margins which means that they are left with less revenue to reinvest.

  • Provide a flat rate for shipping where both you and the customer share in the costs of shipping. 

  • Give a discount or promotion on certain service options to your VIP clients. 

  • Additionally, you can also try offering free shipping on a minimum order value. This strategy can help offset the costs of shipping by helping to increase your average order size. But you're still the one paying for it out of your margins.

Answers to 7 Frequently Asked Questions

Is complimentary shipping or free shipping really free?

It should go without saying but, free shipping is not free. There is always a cost involved. 

The idea of paying nothing to have a product shipped anywhere in the world sounds too good to be true, but that’s just what “free” shipping means. 

The truth about this marketing tactic isn't often felt by consumers who've come to expect it. Instead, businesses suffer from its effects. 

The biggest impact comes for smaller e-commerce companies. Free Shipping can cost more than your business could handle if not done correctly.

How much does free shipping cost?

The cost of complimentary shipping is nothing as it's free, or perceived to be free to the consumer. But the cost of free shipping (to the shop owner) can depend on what type of company you are and what types of products that you sell.

To offer free shipping first you need to make sure that you are getting the best prices possible on your shipping rates. And this is where CourierGateway can help. You can save up to 70% off your first shipment. Let us show you how!

What does complimentary or free shipping do for e commerce customers?

Free shipping benefits consumers by helping them save and by making more money available to them for other necessities.

Bottom line, the less a consumer pays for shipping costs, the more you could expect them to spend on your site.

When should I offer complimentary shipping? 

That's a great question. If you notice sales are slowing down, and your marketing is falling flat, then implementing a shipping strategy incentive could be the next best step.

Offering free shipping may be the key to giving your business a competitive advantage that helps you stay ahead of your competition.

When you maximize your prices and your customers average order value increases, both you and your customer win!

Can't I just show free shipping at the checkout page without making it complimentary? 

Absolutely! Offering complimentary shipping is great, but offering free shipping at the checkout page means that your customer doesn't have to wait until they reach the final step in their purchase journey.

Plus it's a good idea to give customers more time for second thoughts before making any purchases and help them feel more confident about their decision.

Try promoting complimentary shipping during different time periods throughout the year, like after a big sale or holiday season.

What about international shipping?

International shipping can be a challenge for small businesses and ecommerce retailers.

The good news is, complimentary international shipping isn't as hard as it sounds!

With the right logistics partner, you could offer complimentary or discounted international shipping without breaking your bank.

Just remember that when you implement this strategy you should find ways to make up for the revenue lost with higher priced products and other upselling techniques and strategies.

What about marketing my complimentary/free shipping? 

There are a few different ways that you can market complimentary/free shipping.

Some retailers will have banners on the homepage, or in their emails to announce free shipping and other deals relevant to your products.

You could also include complimentary international shipping as one of your marketing strategies by listing it alongside other product benefits when you market online, in social media posts, email blasts and more!

To help you save on shipping and still make a profit when getting started with your complimentary shipping program - contact CourierGateway today! You could save up to 70% of your first fulfillment order. Visit now!

Finally we recommend implementing complementary returns so that customers feel like they're getting the complete experience from shopping on your website.

For some tips about how to do this, checkout Shopify: "How to Implement a Return Policy That's a Win for Both You and Your Customers".

5 Steps to Offering Free Shipping on Your Products and Services

1. Brainstorm and create your free shipping program

There's a balance between offering competitive pricing and giving your customer the incentive of complimentary shipping that will compel them to buy from you instead of one of your competitors.

Find out what percentage of your buyers would be compelled by complimentary or "free" (as in 0% cost) shipping offers for each product category that you sell.

For example: 50% would likely order if they found this information at checkout; 20% might not place an order without it; 30% would order even if they had to pay for the shipping.

One fact to keep in mind:

86% of online shoppers will abandon their shopping cart due to high shipping costs.

*Note: You may want to offer complimentary shipping on some items, but not others. For example, complimentary shipping might be appropriate for high-end products. 

Examples of complimentary shipping incentives are:

  • Free shipping on orders over $100

  • Promotional shipping or limited timed offers

  • Free shipping all orders

  • Free shipping sale

  • Free shipping on certain items

2. Create a free shipping banner for your website

The banner, or announcement bar, is the headline at the top of a web page that lists key features, promotions and other important information to your customers.

It's a headline or value proposition that grabs their attention typically in a short sentence.

Examples of shipping banners are:

  • Free Shipping on Orders over $100

  • Free Shipping all orders or

  • Free Shipping for this week only!

You should create a complimentary banner to promote your free shipping incentive. This will help drive sales when customers are shopping and considering their sale.

Here is another sample that you could use in a banner ad. Don't be afraid to promote a specific courier company over another. Especially if you have better rates with that particular courier. This can help you control your risks on running a shipping promotion. 

"Click Here! Complimentary Purolator ground service included with every order."

3. Invest and create a free shipping ad

It's important to invest in complimentary shipping ad campaigns. This can help increase the number of clicks and conversions on your site or ecommerce store.

Here are some things you can do with complimentary ads:

  • Show a promo code that offers complimentary free shipping when people click it

  • Run ads during holidays when your competitors don't (i.e., Christmas)