When you offer free shipping on Etsy, that’s one less decision for a shopper to make before they buy your product. But, of course, 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 removes the sticker shock from shipping costs and an unnecessary speed bump 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 actual cost to sellers.
Why you should consider offering free shipping on Etsy
There’s no arguing that offering free shipping on Etsy is essential to making your product more appealing to customers. And Etsy knows this. Which is why they tell their sellers to offer free shipping whenever possible.
But we all know free shipping isn’t free to 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 themselves. And all you need to do is adjust your pricing.
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 in 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:
→ 3 Reasons Why You SHOULD Offer Free Shipping on Etsy:
#1. Shoppers expect free shipping.
And we can thank Amazon Prime for that.
Customers now expect free shipping for almost anything they purchase online. That is to say, many customers who are used to buying on Amazon (which is a staggering number) are not used to paying extra for shipping (or even thinking about shipping).
As Amazon is a trendsetter in eCommerce, other marketplaces followed suit, as did standalone eCommerce stores. In the U.S., it’s not common to see an extra charge for shipping from major online retailers.
Consumers are just no longer used to it.
#2. Free shipping on Etsy minimizes friction.
Since 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 obstacles for your consumer and their purchase. And the last thing you want is an abandoned shopping cart.
#3. 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. For example, in the golden era of T.V. shopping, “value” promoted a 30-day money-back guarantee.
Nowadays, it’s something like “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.
→ 4 Reasons Why You May Not WANT to Offer Free Shipping on Etsy:
#1. It’s not your responsibility.
Whether you’re new or old school, shipping is an expense that some business owners argue should be paid 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 getting it to them?
The reality is, if you don’t offer free shipping for your products, your customers are likely to purchase from an Etsy shop that does. So if you’re selling in an already crowded marketplace, you should try anything you can to get a leg up on your competition, without sacrificing your bottom line.
#2. Free shipping cuts into your profits.
You spend a lot of time and effort creating your pricing structure. Considering all your fees as an Etsy seller, calculating the best price to sell a product isn’t simple. And chances are, the leftover profits usually aren’t huge, either.
So why should you lower your profits to deliver your product to a customer?
Like we mentioned earlier in this article, free shipping doesn’t have to cost your business anything. Not if you’re already including the cost of shipping within your listing price. If you’re selling low-ticket items where it’s not feasible to include the cost of shipping, try bundling multiple quantities under one order.
#3. It complicates your pricing structure.
As an Etsy seller, your pricing structure is never straightforward.
Multiple fees impact your pricing structure. Having to add ‘free shipping’ into this pricing structure makes the equation much more complex and prone to mistakes.
By making your customers pay for shipping, you’re making your job just a little bit easier. But in the process, you could be sacrificing additional orders that will never be placed with your shop. At the very least, you may want to consider Etsy’s free shipping gurantee.
#4. 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 must 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 thinner than before.
Shipping prices do change, and it’s possible that you may not notice right away. However, prices are typically adjusted at the beginning of every year. Carriers know that businesses rely on accurate shipping quotes to project their revenue for the year. Which is why it’s important to stay on top of any minor change in price.
Adjusting your prices to pay for free shipping
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.
However, when you offer free shipping, there isn’t an easy calculation for your products other than taking the flat fee off the top. And the flat price between carriers will vary by size and weight, which could also vary depending on what you sell.
Therefore, finding a suitable pricing model for your product is the best place to start.
Can you afford free shipping on Etsy?
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, you probably can’t (unless you raise your prices).
Or, if you sell heavy furniture or large/bulky items, free shipping may be out of the question. If that’s the case, your customers should already expect to pay for shipping in the first place.
Now, if you make a decent chunk of profit with each sale, 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 your product’s ‘cost’ price 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
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 all products made available in the U.S.
Essentially, this service has been implemented to make offering free shipping on products priced accordingly quicker and easier.
The psychology behind this is that a customer ready to purchase something from your shop may add more items to their cart just so they don’t have to pay for shipping.
And it works.
Why pay an extra $10 in shipping when you can purchase an additional product for the same amount?
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 business requires crunching a few numbers to ensure your profit margin doesn’t suffer.
Do you offer free shipping for your Etsy products? Why or why not? Let us know in the comments below.
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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