How to Offer Free Shipping on Shopify And Still Make Profit

Offering free shipping on Shopify can boost sales and improve customer satisfaction, but it's essential to do so without sacrificing your profit margins. By strategically adjusting pricing, setting order minimums, and optimizing shipping process

es, you can provide free shipping while still maintaining profitability. Here's how to implement free shipping and ensure it works for your business.

Why Offer Free Shipping?

Customers love free shipping. Well, who doesn’t? Depending on the products, this cost can be anywhere near 12$ or more. For people who are just getting a small order from your store, the shipping cost can be one of the reasons that turn them off.

If you can manage to offer customers free shipping, it can bring many benefits to your store.

Reduce Cart Abandonment Rate

Seven out of ten people who add products to their cart will leave before making a purchase. This is inevitable and there are a lot of reasons that cause it. One of them is the shipping fee.

When customers check the price of your products, they tend to not include the shipping cost in the total cost. Thus, when they see the actual cost they have to pay, they stop buying, even if the shipping cost is cheap. 

55% of buyers will abandon their carts because the extra costs are too high. By offering free shipping, you are taking away one reason for shopper to abandon their cart.

Competition Edge

In the e-commerce game, you are playing against thousands of other merchants from all over the world. Free shipping can be a game-changer to make your store stand out from competitors.

Online shoppers can be really picky and relentless. They are willing to spend more time to find the best deal they can get, even if it is only a few dollars in difference.

Incentivize More Purchases

54% of shoppers say that they would come back to stores with flexible and convenient delivery options. This is especially important if your store is selling consumable goods.

You can also set a minimum order value for free shipping to encourage customers to buy more products, boosting the average order value.

Should You Offer Free Shipping?

Certainly, customers will be happier and buy more products if you give them free shipping. However, nothing is free and someone has to take care of that cost. In this case, that someone is you. 

So while free shipping can increase your conversion rate, you need to make sure you are still earning profit when offering free shipping.

You don’t want to jump into this without carefully calculating both the upside and the downside of this. Otherwise, you might end up selling a lot and still lose your business.

Here are the factors you should consider before you decide if free shipping is good for your store.

The efforts to set up free shipping

You need to set up your free shipping rules in Shopify and make adjustments when needed. Moreover, when problems happen, you will have to deal with customers and their questions.

How much do carriers charge?

Depending on where you are and where your target customers are, the shipping cost can be tremendous. Try to estimate the cost of shipping using Shopify tools to see if you can tank it.

How much profit loss you can take?

Different products and niches have different margins. However, for most small businesses, the margins can be really small. If that is your case, offering free shipping might not be a great move.

>>>> Read more: Understanding Shopify Shipping: Costs, Rates, and Delivery Methods (2024)

How to Set Up Free Shipping Discounts in Shopify

Offer free shipping on everything

• In your Shopify admin, go to Settings > Shipping and delivery > General shipping rates.

• Under Shipping zones, find the shipping zone where you want to offer free shipping.

• Click Add rate and name it Free Shipping.

• Set the rate price to 0 click Done.

Offer free shipping based on order cost

You can offer free shipping for orders that reach a certain value, e.g., free shipping for orders over $100.

Steps:

• In Settings > Shipping and Delivery, find the shipping zone where you want to apply the discount.
• Click Add Rate.

• Click Add conditional pricing > Based on order price.
• Enter the minimum order value needed for free shipping (e.g., $100).
• Set the shipping rate to 0 then click Done.

Offer free shipping based on weight

If you want to offer free shipping based on the weight of the order, follow these steps.

Steps:

• Go to Settings > Shipping and Delivery.
• Click Add Rate.

• In the desired shipping zone, click Add conditional pricing > Based on order weight.
• Set the weight range for free shipping (e.g., 0 to 5kg).
• Set the shipping rate to 0 then click Done.

How to Cover Free Shipping Rates

Add the shipping cost to the product price

One way to cover the cost of free shipping is to incorporate the shipping fee into the product price itself. By slightly increasing your product prices, you can absorb the shipping cost without affecting your profit margins.

Customers perceive free shipping as a valuable offer, even if the price of the product is higher. This strategy works best when the price increase is minimal and not noticeable to the customer. 

For example, if the average shipping cost is $5, you could increase the product price by $5 and still market the product as having free shipping.

Utilize Fulfilment Services

Third-party fulfillment services, such as Shopify Fulfillment Network or Amazon FBA, can offer significant savings on shipping rates. 

These services have bulk shipping agreements with carriers, which allow them to pass on reduced shipping costs to businesses. By outsourcing your fulfillment to these companies, you can offer free shipping at a lower cost than if you were handling shipping independently.

This strategy not only saves you money but also simplifies your logistics, freeing up time and resources to focus on growing your business. Leveraging fulfillment services can help make free shipping a sustainable and affordable option.

>>>>  Read more: How to Fulfill Orders on Shopify: Detailed instructions

Negotiate Lower Shipping Rates

Another way to cover free shipping costs is by negotiating better shipping rates with carriers. Many shipping companies like UPS, FedEx, and USPS offer discounts to businesses based on shipping volume. 

As your business grows and you ship more orders, you can negotiate lower rates, which helps reduce the impact of offering free shipping. This approach allows you to still cover costs without having to raise prices significantly or lose profits. 

Additionally, comparing shipping rates between different carriers can help you find the most cost-effective option for your business.

Offer Free Shipping with conditions

Offering free shipping with conditions, such as requiring a minimum order value, is an excellent way to encourage larger purchases. By setting a threshold, like "Free shipping on orders over $100," customers are incentivized to spend more to qualify for free shipping. 

This not only helps you cover the shipping cost through the increased order value but also boosts your average order value (AOV). 

You can also set location-based or product-specific conditions to limit the scope of free shipping, ensuring that you maintain profitability while still providing an attractive incentive.

Other Shipping Rate Options on Shopify

Other than free shipping Shopify gives you 2 other viable options: Flat Shipping Rates and Calculated Shipping Rates.

Flat Shipping Rates

Flat shipping rates allow you to charge a consistent shipping fee regardless of the order’s size, weight, or destination. This option works well for businesses with relatively uniform product sizes or weights, as it simplifies shipping costs for both the business and the customer. 

Flat rates can also be tiered based on order value or regions. For example, you can charge $5 for standard shipping within a specific country and $15 for international orders. This approach is easy to understand for customers, making it more predictable and transparent.

Calculated Shipping Rates

For businesses with a diverse range of product sizes and shipping destinations, calculated shipping rates are a more accurate and cost-effective solution. 

Shopify integrates with major shipping carriers like USPS, UPS, DHL, and FedEx to calculate real-time shipping rates based on the weight, size, and destination of the customer’s order. This option provides the most transparency, as the shipping rate reflects the actual cost charged by the carrier.