{"id":999966840,"date":"2020-08-17T20:04:24","date_gmt":"2020-08-18T03:04:24","guid":{"rendered":"https:\/\/shiphype.com\/?p=999966840"},"modified":"2024-01-17T00:16:56","modified_gmt":"2024-01-17T05:16:56","slug":"increase-average-order-value-with-free-shipping","status":"publish","type":"post","link":"https:\/\/shiphype.com\/blog\/increase-average-order-value-with-free-shipping\/","title":{"rendered":"Increase Average Order Value with Free Shipping"},"content":{"rendered":"<p>{&#8220;main-title&#8221;:{&#8220;component&#8221;:&#8221;hc_title&#8221;,&#8221;id&#8221;:&#8221;main-title&#8221;,&#8221;title&#8221;:&#8221;&#8221;,&#8221;subtitle&#8221;:&#8221;&#8221;,&#8221;title_content&#8221;:{&#8220;component&#8221;:&#8221;hc_title_empty&#8221;,&#8221;id&#8221;:&#8221;title-empty&#8221;}},&#8221;section_5ZtkF&#8221;:{&#8220;component&#8221;:&#8221;hc_section&#8221;,&#8221;id&#8221;:&#8221;section_5ZtkF&#8221;,&#8221;section_width&#8221;:&#8221;&#8221;,&#8221;animation&#8221;:&#8221;&#8221;,&#8221;animation_time&#8221;:&#8221;&#8221;,&#8221;timeline_animation&#8221;:&#8221;&#8221;,&#8221;timeline_delay&#8221;:&#8221;&#8221;,&#8221;timeline_order&#8221;:&#8221;&#8221;,&#8221;vertical_row&#8221;:&#8221;&#8221;,&#8221;box_middle&#8221;:&#8221;&#8221;,&#8221;css_classes&#8221;:&#8221;&#8221;,&#8221;custom_css_classes&#8221;:&#8221;&#8221;,&#8221;custom_css_styles&#8221;:&#8221;&#8221;,&#8221;section_content&#8221;:[{&#8220;component&#8221;:&#8221;hc_column&#8221;,&#8221;id&#8221;:&#8221;column_vtfQF&#8221;,&#8221;column_width&#8221;:&#8221;col-md-12&#8243;,&#8221;animation&#8221;:&#8221;&#8221;,&#8221;animation_time&#8221;:&#8221;&#8221;,&#8221;timeline_animation&#8221;:&#8221;&#8221;,&#8221;timeline_delay&#8221;:&#8221;&#8221;,&#8221;timeline_order&#8221;:&#8221;&#8221;,&#8221;css_classes&#8221;:&#8221;&#8221;,&#8221;custom_css_classes&#8221;:&#8221;&#8221;,&#8221;custom_css_styles&#8221;:&#8221;&#8221;,&#8221;main_content&#8221;:[{&#8220;component&#8221;:&#8221;hc_wp_editor&#8221;,&#8221;id&#8221;:&#8221;Xhugf&#8221;,&#8221;css_classes&#8221;:&#8221;&#8221;,&#8221;custom_css_classes&#8221;:&#8221;&#8221;,&#8221;custom_css_styles&#8221;:&#8221;&#8221;,&#8221;editor_content&#8221;:&#8221;<\/p>\n<div id=\"rtoc-mokuji-wrapper\" class=\"rtoc-mokuji-content frame1 preset1 animation-none rtoc_open noto-sans\" data-id=\"999966840\" data-theme=\"Signflow Child\">\n\t\t\t<div id=\"rtoc-mokuji-title\" class=\" rtoc_left\">\n\t\t\t<button class=\"rtoc_open_close rtoc_open\"><\/button>\n\t\t\t<span>Table of Contents<\/span>\n\t\t\t<\/div><ol class=\"rtoc-mokuji mokuji_ol level-1\"><li class=\"rtoc-item\"><a href=\"#rtoc-1\"><b>Using Free Shipping as a Tool<\/b><\/a><\/li><li class=\"rtoc-item\"><a href=\"#rtoc-2\"><b>Ensures You Don\u2019t Lose Money<\/b><\/a><\/li><li class=\"rtoc-item\"><a href=\"#rtoc-3\"><b>Customers Spend More<\/b><\/a><\/li><\/ol><\/div><h2 id=\"rtoc-1\" ><b>Using Free Shipping as a Tool<\/b><\/h2>\n<p>\\n\\n<\/p>\n<hr>\n<p>\\n\\n<span style='font-weight: 400;'>There\u2019s a lot of different advantages to free shipping and they ultimately translate into increased orders. Besides increasing the number of sales, you can use free shipping to instantly increase your average order value as well. Both of these combined are huge. They can make the difference between a good business and a great business.&nbsp;<\/span>\\n\\n<span style='font-weight: 400;'>Let\u2019s say you\u2019ve decided to offer free shipping to your customers. This is where it gets fun.&nbsp;<\/span>\\n\\n<span style='font-weight: 400;'>When offering free shipping, you have to be smart &#8211; you can\u2019t just offer free shipping for all orders. You must set a minimum order threshold for customers to be eligible for free shipping. The shipping cost will have to be factored in as a percentage where it only becomes a small portion of the order value.<\/span>\\n\\n<span style='font-weight: 400;'>Setting a minimum order value has 2 main advantages:<\/span>\\n<\/p>\n<ol>\\n \\t<\/p>\n<li style='font-weight: 400;'><strong>Ensures You Don\u2019t Lose Money<\/strong><\/li>\n<p>\\n \\t<\/p>\n<li style='font-weight: 400;'><strong>Customers Spend More<\/strong><\/li>\n<p>\\n<\/ol>\n<p>\\n<\/p>\n<h2 id=\"rtoc-2\" ><b>Ensures You Don\u2019t Lose Money<\/b><\/h2>\n<p>\\n\\n<\/p>\n<hr>\n<p>\\n\\n<span style='font-weight: 400;'>If you\u2019re selling something for $10 (let\u2019s say a mask), you can\u2019t afford to offer free shipping on this. This is because the shipping cost might be $5 alone. That\u2019s 50% of the sale price. Most businesses don\u2019t have a 50% gross margin.<\/span>\\n\\n<span style='font-weight: 400;'>In this situation, offering free shipping doesn\u2019t make sense.<\/span>\\n\\n<span style='font-weight: 400;'>Now, let\u2019s say you offer free shipping at $100 and the shipping cost is still $5. In this case, the shipping cost will only be 5% of the order value. If you\u2019re operating at a 30% margin, you\u2019re now down to 25% margin in this situation. You\u2019ll still be happy at 25% because there might not be a sale without the free shipping.<\/span>\\n\\n<span style='font-weight: 400;'>The $100 minimum is a more realistic scenario but it still might not be the right number for you. Spend some time and figure out the sweet spot for your business.<\/span>\\n<\/p>\n<h2 id=\"rtoc-3\" ><b>Customers Spend More<\/b><\/h2>\n<p>\\n\\n<\/p>\n<hr>\n<p>\\n\\n<span style='font-weight: 400;'>People don\u2019t like to pay for shipping. People also like deals. When customers aren\u2019t paying for shipping, they feel like they\u2019re getting a deal. They will add more items to cart to not have to pay that annoying shipping fee. It\u2019s a psychological trick but it has benefits behind it too. I also do this all the time.&nbsp;<\/span>\\n\\n<span style='font-weight: 400;'>In fact, I did this today purchasing socks from Van Heusen. My cart had $36 of socks in it. I needed to get to $75 to get the free shipping. Want to know what I did? See below:<\/span>\\n\\n<img class='aligncenter size-full wp-image-999966843' src='https:\/\/shiphype.com\/wp-content\/uploads\/2020\/08\/socks2.png' alt='' width='612' height='798'>\\n\\n&nbsp;\\n\\n<span style='font-weight: 400;'>I justified it to myself because I had $80 worth rewards saved up but either way, I took advantage of \u201cfree shipping\u201d<\/span>\\n\\n<span style='font-weight: 400;'>This works on everyone. It works because there\u2019s value to the customer. The customer is in-fact not spending money on shipping. The trade-off is that they had to spend a bit more. They\u2019d rather do this. 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