Free shipping in ecommerce: Tactics to boost sales and AOV

If customers want anything from their shipping, they want it to be free. DigitalCommerce 360’s 2024 survey on shipping and fulfillment found that a whopping 81.34% of consumers consider free shipping their top priority when it comes to order delivery. Does your business have the same priorities?

With careful consideration, you can provide free shipping to match your customers’ values, while keeping a healthy profit margin. It just takes the right tools, strategies, and partners.

That’s why we’re here. In this free shipping ecommerce guide, we’ll explain the benefits of free shipping, discuss whether it’s right for your business, and review everything you need to implement it.

Free shipping is a great way to please customers, but it can be delightful for your company’s stakeholders, too. That’s because allows you to:

Keep up with the competition

Free shipping is no longer a groundbreaking differentiator in most industries. In fact, it’s fairly ubiquitous. The majority of online retailers — 74% — offer some kind of free shipping. Some of them have a store-wide free shipping policy, while others provide it under certain conditions.

Regardless of the model, free shipping’s popularity among online stores means many customers simply expect it. If you’re charging for shipping, you’re starting from behind and will have to find another way to gain a competitive advantage.

Drive sales and average order value (AOV)

A common question about free shipping online is, “Does free shipping increase sales?” The answer is a firm “yes.” Digital Commerce 360’s data from earlier shows that only 44% of consumers surveyed paid for shipping for even a single order in the last six months. During the same time period, nearly 73% completed a transaction with free shipping. 

So if your brand wants to convert more customers, free shipping is a solid way to do it.

As a bonus, free shipping increases average order value (AOV), too, thanks to order thresholds. Nearly half of customers will meet a minimum purchase requirement just to get free shipping, meaning they’ll spend more to qualify.

Improve value perception

Shopping at a store with free shipping feels better for customers. It all comes down to psychology. 

According to the zero price effect, customers perceive the value of a free perk to be higher than it is in reality. In other words, reducing $3 in shipping fees to zero will have a stronger impact than taking $5 off a $99 item’s price.

“Should I offer free shipping?” Only you can answer this question for your store. While free shipping offers all of the above benefits, your store’s operations will determine if another strategy could be better for you. Think about factors like:

• Your profit margins with free shipping: Offering free shipping means that you’ll have to cover it for your customers. Do you have a plan in place to make up for those extra shipping expenses? We’ll help you work through this question in the next section. If you’re using WooCommerce Shipping, you can quickly see your previous shipping expenses by going to Analytics → Shipping Labels from your dashboard. You can see revenue from shipping fees charged to customers by going to Analytics → Revenue. Use the information from these reports to get a realistic estimation of how free shipping could impact your bottom line. 
• Logistical challenges: Shipping can have different costs depending on service, speed, and location. If you ship from a zone far from most of your customers, for instance, you’ll have extra shipping fees to think about.
• Your stance on eco-friendly shipping: Since free shipping could lead to more orders, it could also increase your contributions to carbon emissions and use of packaging materials. Look into any sustainable shipping measures you may want to take to balance out your impact, like changing your packaging or offsetting your emissions.
• Customer expectations in your industry: In some categories — like fashion or beauty — free shipping is the norm and might be a decisionmaker for shoppers. In others, customers may be more flexible. Look at what your competitors are offering and consider how your shipping policy positions your brand.
• Average order value (AOV): If your current AOV is too low to support the added cost of shipping, you may want to introduce a minimum purchase threshold (e.g., “Free shipping on orders over $50”) to encourage upsells and preserve your margins.
• Return and exchange rates: Free shipping may lead to higher return volumes in certain industries, especially if you’re offering things like apparel or accessories. Factor in the added cost of two-way shipping when evaluating if free shipping makes financial sense.
• Fulfillment partnerships and carrier discounts: Are you using a third-party logistics (3PL) provider or shipping software that offers discounted rates? Those partnerships can reduce your shipping costs and make free shipping more viable. 
• International vs. domestic orders: Free shipping may be feasible for domestic orders but harder to offer internationally. Consider whether you want to limit free shipping by region or create separate policies for different zones.

Sometimes, a different tactic will work better for your store than free shipping. One strategy to try is lowering prices to attract customers instead.

If you’d like to offer free shipping but aren’t sure how to handle the hit to your profit margins, you have options. You can balance out the extra shipping costs with strategies like:

• Outsourcing to a third-party logistics (3PL) business: Depending on the scale of your business and the types of packages you send, outsourcing your fulfillment process could actually save you money. 3PLs, businesses that take care of shipping and fulfillment for you, can negotiate shipping costs and work from multiple locations to reduce prices. Research the shipping rates and services of various 3PLs and compare them to doing it yourself.
• Changing your packaging or packaging process: The packaging materials and processes you use also impact your shipping costs. For example, some forms of eco-friendly packaging cost less than traditional options because they’re lighter. Consider how you can get creative with your packaging to reduce shipping expenses.
• Adjusting your shipping rates: If you don’t plan on providing free shipping for every order, you can change your approach for paid options to recoup some of the costs. You might also tweak your pricing for international or expedited shipping. Run the numbers for table rate shipping or flat rate shipping — two common options that make prices more predictable for you and your customers.
• Increasing product prices: You also have the option to raise your product prices to “build in” the shipping involved. This strategy’s impact will depend on how much you’d need to increase prices, but you can combine it with other tactics so you can raise prices just a little.

It can take some adjustments to find the right balance for your store. 

Even though, as we mentioned earlier, almost three-quarters of online retailers have free shipping options, the same data shows that only 20% offer it for everything they sell. So, you don’t have to offer free shipping on everything to benefit. Try experimenting with these free shipping promotions:

Provide free shipping with a minimum order value

One of the most popular free shipping tactics you’ll see online is setting a minimum purchase threshold for free shipping. You can find one example at House of Malt, which offers free shipping to the mainland United Kingdom for orders over £99.

This policy shows how you can base your shipping threshold on an order value that keeps profit margins in check. Calculate the margins on different order values until you find one where you can handle the average shipping cost and still make a profit.

Your average product price, as well as your audience, can also play a role in that calculation. Since House of Malt sells whisky, a product with a higher price on average, a higher threshold doesn’t feel out of place. Look at your average order value and see if you can convince more customers to meet it by matching your minimum purchase threshold for free shipping.

Offer free shipping as part of a customer loyalty program

You can also use free shipping as an incentive for satisfied customers to join your program. There are many milestones at which you can provide free shipping to loyalty program members, like when a customer:

• Joins the program for the first time.
• Earns a certain number of loyalty points from past purchases.
• Takes part in your loyalty program for a certain amount of time.
• Refers another customer to your loyalty program (a grant way to grow future purchases)
• Writes a review for your store or product.

WooCommerce extensions like WooCommerce Points and Rewards allow you to reward satisfied customers with points for buying products and completing certain actions.This is a great way to encourage customers to take any number of steps on your site. And if you want to provide a reward for actions outside of the extension, you can manually add points to an account. 

Since WooCommerce Points and Rewards offers discounts as rewards, you can offer a discount equivalent to the shipping amount the customer would pay or take points off of their account in exchange for an exclusive shipping code.

Promise free return shipping

You also want to pay attention to your return policy. Nearly half of online shoppers want you to provide free return shipping, with 45% considering free shipping back to the store to be the most important aspect of the return process.

WooCommerce has a built-in refund feature to help you manage refunds and returns. There are also extensions that integrate with services like ShipStation to help you create free shipping return labels. Look at your existing return program and look for ways to make return shipping accessible and free using these kinds of tools.

Run limited free shipping promotions

Feel free to narrow your free shipping scope however you’d like to meet your profit margin plans. Consider limiting your offer to factors like:

• Time: Some stores will offer free shipping at times when online shoppers are most likely to buy, but competition is high. This is particularly true during the holidays. This approach can help you maximize conversions and get a higher average order value during critical times.
• Products: If you have products with lower shipping fees due to weight, you can offer free shipping only for those items. Go back to your AOV calculation to see if it’s worth it to provide free shipping for some products over others due to their weight or sturdiness.
• Location: Shipping prices can differ based on travel length, so you could also provide free shipping to addresses within a certain distance of your fulfillment center. Consider adding a shipping zones map so customers have a transparent view of why certain orders get free shipping and others don’t.
• Speed: You can also factor shipping speed into your free shipping deal. Perhaps you could offer free standard shipping but charge for two-day or priority.
• Subscriptions: Subscription-based stores often provide free shipping to subscribers, like WooCommerce-powered Universal Yums. This model makes it easy to build the cost of shipping into your subscription price while offering a flat price to customers.

As you design your free shipping program, keep in mind that you can mix and match the factors that go into it. You could offer free shipping for orders over a certain amount during peak seasons, for instance.

Set up a free store pickup program

If you have a brick-and-mortar store, you can save money for both your store and online shoppers with a free local pickup option. Provide this option at checkout and then notify your customer when their order is ready and give them a time window to come pick it up. You’ll save money on shipping materials and costs while providing a more eco-friendly option.

WooCommerce comes with all sorts of built-in features and extensions to configure your free shipping program as you like. Let’s go over four different ways to add free shipping to your store based on the model you want to use.

Bonus tip: Install top WooCommerce shipping extensions to create an even better experience for you and your customers. WooCommerce Shipping lets you buy shipping labels at a lower rate right from your dashboard. Meanwhile, the Shipment Tracking extension allows you to send shipment tracking links to your customers.

Set up and configure free shipping in your store 

Your WooCommerce store has the option to provide free shipping if you have shipping zones set up. Go into your Settings menu, then follow these steps:

1. Visit Shipping → Shipping zones, then click the Edit button on the shipping zone you want to make eligible for free shipping.
2. In that shipping zone’s menu, click the Add shipping method button near the bottom of the page.
3. Choose Free shipping and give your shipping method an appropriate name for customers to see.
4. Pick the requirement your customers must meet to receive free shipping in the Free Shipping Requires dropdown.

WooCommerce supports the most popular free shipping requirements, including:

• No requirement: Universal free shipping to that zone
• A valid free shipping coupon: Free shipping with a coupon you created under WooCommerce → Marketing → Coupons
• A minimum order amount: Free shipping when the customer meets a certain order value

For even more flexibility, you can also combine a coupon with a minimum order threshold by selecting A minimum order amount OR a coupon or A minimum order amount AND a coupon.

Click Save changes at the bottom of your shipping zone’s menu, then repeat for each applicable shipping zone. You can choose different free shipping requirements for each zone to fit your financials.

Create advanced rules for free shipping

If you want to base your free shipping on other factors like loyalty program membership or product types, the Conditional Shipping and Payments extension has you covered. As its name implies, it sets the conditions for making certain shipping and payment methods available to your customers.

After you install this extension, you can restrict your shipping methods on a global or per-product basis. Go to WooCommerce → Settings → Restrictions, then Shipping Methods to set who can access free shipping throughout your store. When you want to configure restrictions for just one product, visit Product Data → Restrictions, then pick the restriction type you want in the Choose restriction… dropdown.

In these menus, you can limit free shipping to certain customers based on:

• Product type, category, or shipping class
• Order weight, item quantity, or order total
• Coupon codes
• When someone purchases a subscription
• Individual customers or customer roles like a loyalty program member

If you plan on using this extension just for free shipping conditions, it’s ideal for requirements related to customer role, product type, or order conditions. The WooCommerce core free shipping features already support coupon codes.

Start a subscription program with free shipping

You can set up a subscription program with free shipping using the WooCommerce Subscriptions extension. This extension can create subscription products, set up recurring payment methods, and determine some aspects of your subscription product’s shipping cost.

WooCommerce Subscription’s main free shipping feature is the One time shipping option you can choose in your subscription product’s settings. With this setting, your customer will only pay shipping the first time they get their subscription. Go to WooCommerce → Products → Edit Product, then Shipping to find this checkbox.

Otherwise, WooCommerce Subscriptions works with either of the above two shipping options we’ve talked about. For example, you can set your subscription product to have free shipping using the product-based conditions available through the Conditional Shipping and Payments for WooCommerce extension.

Add a free local pickup option

The built-in features in WooCommerce core also include support for local pickup. Setup works similarly to adding free shipping, but you’ll choose a pickup option instead. Let’s go over the steps:

1. Visit Shipping → Shipping zones, then click the Edit button on the shipping zone you want to provide local pickup for. Here, you can choose a zone that’s close to one of your retail locations.
2. In that shipping zone’s menu, click the Add shipping method button near the bottom of the page.
3. Choose Local pickup and give your pickup option a name for customers to see.

This process works a bit differently if you use a WooCommerce Blocks-based checkout. Once you have a Checkout block, you can configure local pickup with these actions:

1. Go to WooCommerce → Settings → Shipping, then navigate to the Local Pickup tab.
2. Click the Enable local pickup checkbox.
3. (Optional) If you’d like, rename your local pickup option to a new name customers can see in the Title box.

Both of these methods also allow you to charge for local pickup and determine if the pickup cost is taxable if you decide to charge for this option in the future.

After you set up your store’s free shipping options, it’s time to spread the word about them. Promote your free shipping with tactics like:

• On-site alerts: The top and bottom of your website are common places for customers to check if you offer free shipping. Use the Top Bar for WooCommerce extension to create a dynamic top bar for this purpose. You can also edit your WooCommerce theme to broadcast your free shipping perk.
• Display advertising: Display ads like Google Ads let you reach an audience outside of your social media following. Make your free shipping the front-and-center benefit of your ad to draw in new customers.
• Social media: Make a post on each of your social platforms about your new free shipping offer. Then, keep posts about your free shipping in your regular social post rotation. You can also mention your free shipping when you publish updates about new promotions and sales.
• Email marketing: Using your favorite newsletter platform like Klaviyo, announce your new free shipping perk to your subscribers. Moving forward, you can call out your free shipping in a banner in future newsletter editions.

Like any other initiative for your ecommerce store, free shipping programs work best when they fit your audience and business strategy. After you launch your free shipping options, watch your WooCommerce analytics. See if you have any increase in AOV, sales, or new customers in the months after you start offering free shipping. Then, adjust your free shipping requirements or model if you see ways to improve.