Is it time to start offering free shipping in your Etsy shop? What about free returns? It could be the most profitable move you make this year.
Before getting into the why’s and how’s, it’s important to acknowledge the drawbacks. Free shipping, either on delivery or for returns, isn’t actually free! You, as the seller, end up paying the cost. So drawback numero uno is the fear/possibility/nightmare that making a move like this is going to pulverize the profits you are seeing, which might be feeling a bit low already.
But we’re talking about making money here, not throwing it away. Free shipping could be the most “profitable” move you make this year, not the most “expensive” move you make this year.
I’ll never forget the advertising salesman selling me a large and expensive print advertisement. The ad was going to cost my business $1500 per month for a year and I was pretty well freaking out before signing the agreement. That’s when, in true salesman form, he said “Remember, advertising doesn’t cost, it pays.”
I knew I was being sold to, but that didn’t stop me from thinking about what he was saying and asking myself if it made sense to my business. It did, and I went ahead with the largest business expense I’d ever had at that point and it did pay off. But not until after I took that leap of faith.
Free shipping is like that. Thankfully it’s on a much smaller scale. For most Etsy sellers, offering free shipping in your home country can be a money-making proposition. If done properly, it should add to your bottom line, not take away.
Five Ways Free Shipping Makes You Money
1. Better Conversion Rate
The most important way offering free shipping is going to impact your business is going to be an improvement in conversion. Simply put, more people will go ahead and decide to buy when shipping costs are not in the way. Every business is different of course and this isn’t 100% absolutely true, but it’s very close to that. Free shipping reduces friction in the sales process. It’s as simple as that.
2. Increased Customer Loyalty
Internet shoppers are very partial toward shops that offer free shipping. Your customers on Etsy know the difference between your Etsy shop and someone else’s. You’re differentiated by your products, your images, your prices, your “voice”, and a long list of other factors, one of which is your shipping cost. If you offer free shipping, your customers will remember, and all things being equal they’re more likely to buy from you again.
Repeat customers are a MAJOR boost to profitability for any business.
3. Process Simplification
Your time is valuable. As a small independent seller there are approximately a million things you need to be doing at any given point in your day! This means that anything that saves you time is equal to an increase in profits.
Simplifying your shipping process is a big step in the right direction and if you offer free shipping that’s going to remove a few steps in many circumstances. This is especially true if you bill for actual shipping cost or refund overcharged shipping, which many Etsy sellers do.
4. More Effective Advertising
As a business owner, it’s important to pay attention to what works in advertising. We know great looking images work. We know being in front of the right people works. And we know putting offers in your advertising works. But offers like special sales change based on season or what items we might have too many of. Changing out all of our advertising when that happens can be too much work. “Free Shipping” can be an ever-present offer on your advertising that increases your click-through rate and therefore means more bang for your buck.
5. More Positive Reviews
Even though free shipping is commonplace and people are somewhat used to it, that doesn’t mean customers don’t appreciate it. When you get something dropped off at your front door for free don’t you have a thought along the lines of “how cool is that?! I didn’t even have to pay for shipping!” It’s a nice thing and the continuation of a happy experience. Your customer is going to be more likely to leave you a positive review which increases conversion and starts the process over with someone new!
It’s Not Free But It Could Be Close
Free shipping isn’t free. You have to pay which is why many small businesses still don’t offer it. But do you really have to pay all that much? Here are a couple of ideas that might lower the cost:
- Use Less Costly Methods – If you’re in the United States, the USPS has some pretty good rates for many items. It’s worth taking a look to see if a change in your shipping provider, packaging, or speed could reduce the cost of sending your items. If you print your postage with a service like Endicia, you can even get free package tracking and discounted commercial base rates.
- Increase Your Prices – The customers who are actually buying from you now are doing so at the “total” price, including shipping. So they’re already willing to pay that price. Even if you raised your price to the full amount it currently is with shipping, chances are your sales will increase… but a better solution might be to raise your prices enough to cover just part of the shipping, knowing that the other advantages listed above will more than cover the rest.
Going the Extra Mile – Free Returns
If free shipping is now the de-facto standard, free returns is the new “wow” factor that will really raise customer’s eyebrows and completely remove the most common objection to buying online… “what if I don’t like it, or it doesn’t fit, or…”.
Major retailers are offering this more and more and with data from thousands of sales you can bet they know something you don’t know. The good news is it’s easy enough to figure out what they know by watching what they do. If the biggest players are offering free returns, there’s a profitable reason behind it.
Check out this infographic:
Source: Endicia’s Savvy Shipper Blog
Endicia has recently started offering its customers the ability to print “Pay on Use” free return labels.
This allows you to print a return label addressed to you and include it in your outbound shipment. You only pay for the shipping when a customer actually places that label on a return package and puts it in the mail.
While this may not work for every business, it is a great way to build your brand as one who puts the customer first.
What Works for Your Shop?
What about you? Do you already offer free shipping or free returns, if so how has it worked out for you? If not, do you plan to start trying it this year?
Feel free to jump in in the comments below!
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Hi all! Does anyone who offers items under $10 offer free shipping? I am worried that my price will seem high compared to an already saturated market if I add the cost of shipping into the cost of the item.
Tim Layton says
Kim and I were talking about this yesterday. We have some items in that range and quite a few not much higher, but they don’t cost much to ship. Our thought was that most lower cost items also don’t cost much to ship. We would love to hear from someone who has done this on low cost items.
But even on heavy items I guess it can work. The mailman just delivered two bottles of awesome cooking oil that were $10 with free shipping. We ordered two but it would have been free with one. Something heavy like that must be a margin killer. But it came in two days via USPS.
Happy Hippo Arts says
Great article! I am in Canada, does anyone know of a service like Endicia for Canada Post!?
The reason those big businesses can do ‘free shipping’ and ‘free returns’ are because they get a discounted (probably heavily) rate from the post office…they also usually charge a little more on each item then it would be in a store…
I normally sell more than one item in an order, if I added the $5 (US shipping) to each items price, I would be terribly overcharging on the people who buy more than one item…I’d much rather show real shipping and real prices.
Tim Layton says
Hi Brenda – I’m sure that you’re right about the discounts on shipping, but I’m not sure I’d agree that’s “the reason” they do free shipping. I’m guessing they would still do it even if they had to pay more. The bulk discounts they get do make it easier though, no doubt about it.
You mention the multiple items and it reminded me of a whole segment of this debate our post didn’t mention. — Namely the “free shipping on orders over $ X ” where X is some number chosen by the seller that makes sense for them. One of the studies I read in preparation for this post indicated that a surprising number of people would easily add extra items just to reach that free shipping threshold. I guess they figure they can pay for shipping or buy a little more and get the shipping for free.
We were also at about that same cost for shipping. Priority Mail flat rate envelopes are $5.05 in the US. We use those a ton but found that we can ship the same item in a small package usually for quite a bit less, depending on where it’s going. We started with the Priority Mail envelopes because we wanted the tracking that came with it, but now tracking is also included on the small packages if you use an online shipping solution. (as we mentioned above, we use Endicia and we’ve seen this free tracking added to our packages).
I’m not trying to argue though because your points are good ones and I agree for sure it would be much easier to do if we paid the same for shipping as Amazon does!
Tim Layton says
I’m just thinking about this some more…
I totally get where you’re coming from on this and it just really does “feel right” to be clear and open and honest about your pricing. This is the item, this is the shipping, this is the total. It’s straightforward and good people like to be straightforward in their business.
But it just might be worth a little test period to see if it’s what the customer wants. Does the customer really care how it all breaks down? Or are they just interested in the bottom line? Does the idea that they are getting something delivered to the front door for free make them feel better enough about the transaction that they just don’t mind the few extra bucks?
It’s important to be honest, but I think it is possible to over-do the breakdown.
I used to be a contractor (still am, I guess, just not practicing at the trade)… some contractors used to break down the price into a hundred different line-items showing each line… drywall, paint, trim, nails, electrical, etc. I used to just give one price. Bottom line, that’s it.
When I tried the broken down pricing I realized I had to sell each item on the list! I had to convince the customer line by line that the each price was “worth it”.
When I gave one lump sum, it was actually much easier to maintain integrity and much easier to get the customer to say yes.
Once again, I’m not arguing and I’m not at all saying that Free Shipping is for everyone. I just do think that these psychological components of the sale are important to consider.
I’ve thought of doing this but putting a minimum order price. What do you think about doing it this way?
Tim Layton says
Yes Gina… that’s a good idea and we actually read some studies that showed a free shipping threshold often enticed people to go ahead and bump up the order.
The only drawback is the lack of simplicity. Everyone understands free shipping but no matter how hard you try to explain to your customers the minimum price for free shipping I’m just sure there will be those who don’t/can’t/won’t read the sign.
We all get those…
Good article, lots to think about, I keep going back and forth on the issue, but now I think I’m moving more toward the free shipping.
I am wondering about the etsy fee which is based on the selling price and including the shipping the overall price. Wouldn’t that make the fees that Etsy receive higher?
Katie Ward says
I am wondering if it is possible to use a free shipping threshold on Etsy?
Candyce Ann says
I set up coupon codes on my shop for free shipping on orders over $25. When you set up the coupon code, Etsy will allow you to designate free shipping on a minimum order total.
This has worked well for me so far. Customers have sent me convos for recommendations on what to add to their order just so that they can hit the $25 minimum. 🙂
Thanks for the info. I’ve been struggling with shipping charges. It seems difficult to get it accurate for multiple items so I have been considering a “free shipping over $xx” option. However, I haven’t figured out if that means I should raise prices across the board.
These are all ideas I’ve considered but I’m wondering if there’s any way to purchase a return shipping label via Etsy’s program with Encidia and email it to a customer. Has anyone done this or done something similar?
Ive had where I had my entire shop at free shipping but it didn’t seem to do anything for me.
Elly Sketchit says
Free shipping won’t work if you jack your prices to cover the costs – especially if you have a loyal customer base. This recently happened with one of my favorite shops and I won’t be buying from them now. They used to have a “free ship if you purchase $50+” code to use, but now with their so-called “free” ship, they’ve raised costs astronomically on items, making it costly as heck to buy more than one thing every now and then. That’s business sense for them, yes, but as a buyer I will now stsy away instead of sinking $60 on bath bombs every few months (yeah, I have a problem lol).