How to Provide Free Shipping to Your Customers

Kris Gösser](https://hub.shipium.com/author/kris-gosser/)

Updated July 7, 2026

Introduction

We have all seen the industry reports over the last couple of years: Consumers want their orders quickly. In fact, 36% say they will shop elsewhere if a fast shipping option isn’t available. We previously wrote a play on implementing a profitable 2-day shipping program due to its urgent importance to operators.

However, did you know that a free shipping option is even more important? Online shoppers vastly prefer free delivery over fast shipping if given the two options:

• Several industry studies indicate that between 75% and 80% of consumers will shop elsewhere if free shipping isn’t available.
• Offering free shipping was a growth driver for Amazon long before Prime came on the scene.
• Zulily became the fastest growing ecommerce business of all time partly due to their orientation around free shipping.

You need to provide a free option to compete, but increasing shipping fees is unsustainable, requiring a smarter plan. This play will guide you on providing financially feasible free shipping to customers.

Challenges with Trying to Offer Free Shipping

Creating a free shipping program that maintains profit margins is fundamentally a financial challenge. Most solutions will focus on economics rather than just operational hacks. Free shipping is about hitting margin targets effectively:

1. Economic and Financial Solutions: Adjust the unit economics to reduce shipping costs, allowing for aggressive free delivery promotions.
2. Frontend and Backend Innovations: Implement incentives for affordable free shipping while ensuring that costs are balanced operationally.

This article will focus on the economics of free shipping strategies.

Shipping for Free: Recasting Your Unit Economics

Economic innovation means changing the unit costs that affect your P&L. Outbound shipping, as a per-unit cost, is one of the largest operational expenses in ecommerce, averaging around 12% of annual online sales:

Saving even small amounts on shipping can yield significant operational benefits.

Impact of Focusing on Outbound vs Inbound Shipping Costs

Reducing costs on outbound delivery is more impactful than on inbound logistics. For example:

Reducing the cost of outbound shipping can lead to larger overall savings compared to minimizing inbound costs.

Changes That Affect the Cost of Outbound Logistics

Outcomes related to inventory placement can heavily impact outbound shipping costs. For instance, split shipments can significantly reduce margins:

How to Design Free Shipping Programs

When considering free shipping, understand that costs do not scale linearly. It’s crucial to design shipping economics from a minimum starting cost. For example, ordering thresholds for free shipping can leverage these economics.

Increasing Average Order Size

A clear way to improve operational costs is to encourage larger cart sizes. For instance:

• Shipping multiple items together significantly reduces the shipping cost percentage per item.

Offering Subscriptions

Predictable revenues from subscriptions also allow for optimized shipping strategies:

• Identify the most cost-effective shipping Methods based on customer subscription timelines.

Loyalty Programs

Creating loyalty programs can encourage customer retention while improving profit metrics:

• A strong loyalty incentive can drive more volume and better margins linking back to free shipping capabilities.

How Shipium Helps

Shipium addresses the challenge of executing free shipping strategies effectively. Integrating their product APIs can enhance the ability to meet promises made to customers, connecting delivery expectations with fulfillment operations.