#TEE 025 The Shipping Dilemma: Should Etsy Sellers Offer Free Shipping or Charge for Shipping Costs?Sep 11, 2023
Read time: 5 minutes
Shipping costs have been steadily rising in recent years, leaving many Etsy sellers with a difficult decision - do you offer free shipping and absorb the costs yourself or pass the expenses onto the customer? As an Etsy seller, determining an optimal shipping strategy is an important sales consideration that requires careful evaluation of the pros and cons. In this post, I’ll break down the key factors to help you decide whether free shipping or charged shipping makes the most sense for your Etsy shop.
The Benefits of Offering Free Shipping
One of the biggest advantages to offering free shipping is that it can help incentivize buyers and increase conversion rates. Research shows that customers love free shipping, with some surveys indicating that 9 out of 10 shoppers prefer it. When a customer is presented with the option of free shipping versus an extra fee at checkout, they are much more likely to complete the purchase. This suggests that free shipping could significantly boost your Etsy sales.
Another benefit is improved customer satisfaction. When the shipping cost is already covered, buyers don’t have to worry about getting hit with any surprise charges at the end. This leads to a smoother, more enjoyable purchasing process. Positive shipping experiences translate to higher customer loyalty over the long-term as well.
Additionally, providing free shipping on your Etsy products can give you a competitive edge against sellers offering similar items. Many top Etsy shops have adopted a free shipping strategy. You may lose potential sales to competitors if you charge for shipping but others don’t.
The Downsides of Eating Shipping Costs
However, offering free shipping does come with a few caveats. Most notably, you have to absorb the shipping expenses instead of passing those costs onto the customer. This directly cuts into your profit margins on each Etsy sale. The price you list your products at will have to account for estimated shipping to avoid losing money.
Underestimating your average shipping costs could have devastating consequences too. Let’s say you offer free shipping on a heavy or bulky item that ends up costing £15 to ship across the country. If you only charged £35 for the product itself, you’d be losing money by having to cover unexpected £15 in shipping out of pocket. Packing mistakes and shipping carrier mishaps can also become costly if you have to refund shipping.
Another consideration is that free shipping may not make sense for international Etsy sales or long-distance domestic shipments. The higher costs associated with those situations means you either need to exclude them from your free shipping policy or account for much higher shipping expenses in your pricing strategy.
Evaluating Charging for Shipping
On the other hand, charging calculated shipping rates allows you to maintain profit margins by passing those expenses directly to the buyer. You can input the actual shipping cost during the Etsy checkout process to avoid losing any money. This method also avoids any surprises stemming from underestimating shipping prices.
Charging for shipping also provides more pricing flexibility based on the customer’s location. For example, you could charge £5 shipping for domestic UK orders under one kilogram but £15 shipping for international orders under one kilogram. Location-based shipping tiers help keep your Etsy shop profitable across all markets.
The flip side is that adding shipping costs at checkout may cause some customers to abandon their carts. Psychologically, extra fees tacked on late in the buying journey can deter shoppers that were originally interested in your products. Analysing your lost conversion rates can reveal if charged shipping has a notable negative impact.
Another potential problem is reduced customer satisfaction from the perception of deceptive fees. Some buyers may feel misled if they expect free shipping, even if the charges are clearly stated. Be prepared to handle complaints and explain why shipping costs are necessary for your business.
Strike a Balance With a Hybrid Shipping Approach
Given the pros and cons on both ends of the spectrum, a balanced approach may be optimal for many Etsy sellers. A popular middle ground tactic is to offer free shipping on orders over a specified amount, such as £35 or a specified number of items. You can charge calculated shipping rates for orders under that threshold. This helps incentivise larger order values to help defray shipping expenses.
Other permutations could include:
- Offering promotional periods of free shipping to boost sales
- Charging flat-rate shipping based on average costs for your products
- Providing free expedited shipping over certain order values
- Excluding heavy or bulky products from free shipping policies
In my recent Tiktok I show you step by step how to set up the method of setting a number of items to be purchased to qualify for free shipping. Remember to share your coupon code with your buyers in the listing description, your shop announcement and for good measure I add it as a graphic to one of my 10 photos.
The best shipping model depends on your profit margins, average order value, product types, and target customer locations. Be prepared to continually evaluate and adjust your policies. As your Etsy shop grows, so will your shipping volumes and expenses. Tweak your approach to balance customer satisfaction with profitability. With the right strategy, you can cover your shipping costs while keeping your Etsy buyers happy.
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