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Should You Offer Free Shipping on Etsy?

When you offer free shipping on Etsy, that’s one less decision for a shopper to make before they buy your product. The price they see is the price they pay. But what does it cost you?

Consumers love free shipping. It’s one less fee they need to worry about when budgeting for a purchase. It takes the sticker shock away from shipping costs, and it removes a speedbump on the road to their order. But free shipping isn’t free. Far from it.

In this article, we’re talking about why consumers love free shipping and its true cost to sellers. 

Free shipping on Etsy

Woman figuring out if she should offer free shipping on Etsy.

There’s no arguing that free shipping on Etsy is essential to making your product seem more attractive to customers. Etsy knows this, which is why they tell their sellers to offer free shipping whenever they can.

But we all know that free shipping isn’t free for you, the seller.

Either the customer pays for it, or you do. And unfortunately, a sold product doesn’t deliver itself – not yet, anyway. 

However, there are ways to make your customer feel like you’re paying their shipping costs instead of them. And all you need to do is adjust your pricing.

Truth be told, if you’re going to offer free shipping, changing your pricing is the only way to do it without saying goodbye to an already thin profit margin on a very competitive, artisanal marketplace. 

But before we dive too far into the how here are several arguments for (and against) offering free shipping on Etsy:

Why you should offer free shipping on Etsy:

Shoppers expect free shipping.

…and we can thank Amazon Prime for that. 

Customers now expect free shipping. That is to say, many customers that are used to buying on Amazon (which is a staggering number) are used to not paying extra for shipping or even thinking about shipping. 

As Amazon is a trendsetter in the eCommerce world, other marketplaces followed suit, as did standalone eCommerce stores. In the U.S., it’s not all that common to see an extra charge for shipping from major online retailers.

Consumers are just no longer used to it.

Should you offer free shipping on Etsy? Close up of Amazon box.

Free shipping on Etsy minimizes friction.

As you’ve just read, the customer now expects free shipping. By removing one more number they have to calculate, you minimize friction and the number of decisions to make in their product purchasing journey.

One less sticking point means fewer things in the way of your consumer and their purchase. 

It makes your product more attractive.

Value marketing is the process of marketing the value around a product, not just the features or benefits of the product itself. In the golden era of TV shopping, it was promoting a 30-day money-back guarantee.

Nowadays, it’s “buy now, pay later.”

The point is that these are features that you, the Etsy seller, can apply to any product to add value – being able to say that your product is delivered for free is one less thing for the customer to pay for but one extra reason for them to buy from you rather than a competitor. 

Why you shouldn’t offer free shipping on Etsy:

It’s not your responsibility.

Whether you’re new or old school, free shipping is an expense that some argue should be worn by the customer.

After all, if the customer can’t find something they like in a physical store, why should the seller be responsible for the cost of getting it to them?

Free shipping cuts into your profits.

Free shipping on Etsy - close up of calculator and stack of money.

You spend a lot of time and effort creating your pricing structure. Taking into account all your fees as an Etsy seller, then calculating the best price to sell a product isn’t a simple task. And chances are, the leftover profits usually aren’t huge, either.

So why should you then lower your profits even more to get your product to a customer?

It complicates your pricing structure.

As an Etsy seller, your pricing structure is never straightforward.

As you just read, there are loads of fees, both listing and transactional, that impact your pricing structure. Having to add ‘free shipping’ into this pricing structure only makes the equation much more complex and prone to mistakes. 

It’s more work to stay on top of

There’s more than one carrier to choose from. And whichever company you decide to use will have its own pricing model. As soon as their pricing changes, you’ll need to adjust your prices accordingly.

If you’re not on top of this right away, a few orders could go out before you realize your profit margin is now thinner than it was before.

Free shipping on Etsy & your pricing

Close up of Etsy package inside a free shipping parcel.

There are many different product pricing models out there that you can use to price your products. And when it comes to your profit margin, it’s as easy as calculating a quick percentage.

When you offer free shipping, however, there isn’t really an easy calculation for your products other than taking the flat fee off the top. And the flat fee between carriers will vary by size weight, which could also vary depending on what you sell.

Therefore, finding the right pricing model for your product the best place to start. 

Once your product pricing is ironed out, it’s time to assess whether or not you can afford to offer free shipping. If your profit margins are low, then you probably can’t (unless you raise your prices).

If you’re already making a decent chunk of profit with each sale, then you’re more likely to afford free shipping without changing your current prices.

However, as shipping is a flat fee and profits are percentage based, it pays to make the ‘cost’ price of your product include the shipping cost. 

This means that any profits or other calculations you make based on shipping will already have shipping taken into consideration. 

Etsy’s free shipping guarantee

Woman holding Etsy package.

Etsy has a built-in system that, if enabled, automatically offers free shipping for U.S. buyers on specific products:

  • Individual items worth $35USD and up
  • Orders with a total cost of $35USD and up

Once enabled, the free shipping guarantee will be applied automatically to any new listings you create but won’t apply to buyers in other countries or to all products being made available in the US. 

Essentially, this service has been implemented to make it quicker and easier to offer free shipping on products that are priced accordingly. 

However, the jury is still out about its effect on your rankings in Etsy searches. Some sellers say that turning it on and back off made their traffic (and therefore sales) plummet, and some also say that turning it on caused their sales to plummet. What is clear is that offering free shipping, either by your guarantee or in the shipping method, does help you rank higher in search. 

It’s important to note that if you turn guaranteed free shipping on, you need to adjust your prices manually and then readjust them when you turn guaranteed free shipping off. 

Conclusion

Free shipping is a deal breaker for many Etsy shoppers, regardless of your product. 

In the modern world of eCommerce, free shipping is usually just a given. However, making it work for your specific business requires crunching a few numbers. If you believe the community’s feedback about Etsy’s guaranteed free shipping feature, it may be worth avoiding and sticking to your own pricing plan to absorb any shipping costs.

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4 replies on “Should You Offer Free Shipping on Etsy?”

I really wish this article had addressed the issue of what happens with returns when you offer free shipping. To me, it is a huge disincentive.

This is very interesting as a very, very, very small niche on Etsy ( I sell hot coco the issue is not make free shipping work the issue is Etsy’s $35 free shipping. It is not profitable to use in anyway especially after this years shipping shortages and inflation nightmare. They should move it to $50 in order for small businesses to make a tiny profit instead of giving products away. After all the items on Etsy should be handmade items (but we know that’s not true) this includes time to make item then ship at $35. I understand working in the cost but most I have spoken with have said between Etsy’s price hikes per item, the off site ads you cannot shut off after $10,000, and no shop owner support, is the reason why a lot have moved to either Amazon, Shopify, eBay or are designing their own websites in conjunction while remaining on Etsy. I started with Etsy 3.2 yrs ago. I now get more traffic on my website then I do Esty. If I do anything like advertise or promote Etsy I get nailed with offsite ads and fees. I make a profit on my own website instead of braking even on Etsy. Thank you for you insightful information. Happy holidays

I decided to offer free shipping and adjusted my prices accordingly. However, the bigger issue is how to handle the returns. I have put a note in my FAQs that if an item is returned, the actual cost of shipping will be deducted from the refund. However, if customers don’t see this information (although I do spell it out to them when I issue the Return Authorization), I am worried that this will result in low reviews. Now if I could only get my profit margin high enough and return rate low enough (although many returns are due to customers not measuring accurately for size, even though I have very clear sizing instructions) to cover it. Then I could even offer free returns, which I guess I have Amazon to thank for people wanting Free Shipping and Free Returns. As an Amazon Prime buyer myself, I always look for this when I shop.

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