How to Create a Competitive Shipping Strategy

As a business owner, you think carefully about appealing to shoppers when branding, marketing, and promoting your items, and it’s essential to be just as strategic with how you present the costs associated with purchasing your item—including shipping and handling.

Why is shipping price so important? It can be one of the first pieces of information that customers look for when deciding whether to buy. Your shipping prices may be key to turning those interested shoppers into customers. One of the most effective ways to turn a browser into a buyer is to make purchasing as seamless as possible. High shipping costs relative to the item price can raise a red flag and make them less likely to buy. In fact, we know that shoppers on Etsy are 20% more likely to complete their purchase when the item is marked as shipping for free.

While there will always be shipping costs to pay, the way you work those costs into your pricing structure is part of your overall business strategy. Just like the cost of your materials and other business expenses, it’s a cost you need to consider when setting the price of your item.

Read on for strategies you can consider on how to price your shipping competitively and help US shoppers discover your items more easily in Etsy search with a free shipping guarantee. Keep in mind that how you determine and set prices for your shop is your decision.

Researching your market

People come to Etsy with expectations based on their other online shopping experiences. But these days, online shoppers expect free shipping everywhere they go. Etsy is no exception. They have the opportunity to browse through thousands of unique items on Etsy before deciding to buy, so your shipping price could determine whether or not you hear that magical “cha-ching.” Here’s an example of one seller’s shipping strategy.

Rebecca Saylor, who sells handmade pillows in her San Francisco-based shop OodleBaDoodle, did some market research to help inform her shipping cost strategy. She had been getting lots of favorites and followers on Etsy but not many sales. She wanted to know why shoppers were showing interest, but choosing not to buy.

She started by analyzing bigger retailers. “I like to look at what big brands are doing, because they have the marketing budget and product experts to do the research,” she says. She looked at how home decor brands were pricing their pillows. She asked her customers and fellow sellers how much they’d expect to pay for shipping on her products when she sold in person and during meetings of her local Etsy Team. Rebecca found that many brands offered free or low-cost shipping, and learned that this was aligned with her target market’s expectations as well.

Rebecca decided to offer free shipping to see how it affected her sales. Would buyers spend more in her shop if they didn’t have to pay for shipping? She soon got her answer: She began seeing an increase in sales. When Rebecca decided to try shipping for free, she put herself in the buyer’s shoes. “I’m very sensitive to shipping prices myself,” she says. “If I can get the same item with free shipping—as long as I’m still supporting the retailer or shop that I want to—I always opt for free shipping.”

Recovering shipping costs

If your shipping strategy includes unconditional free shipping or a free shipping guarantee, you may consider adjusting your item prices to recover shipping costs. Recovering shipping costs strategically while offering free shipping options that meet buyers’ shipping expectations can create a positive result on both sides of the transaction. Watch the video below to explore five seller-tested strategies for pricing shipping competitively with Isabella Diaz, an experienced Etsy admin and shop owner.

Offering a free shipping guarantee

To better meet US buyers’ expectations when it comes to shipping price and receive priority US search placement in the Etsy app, you can offer unconditional free shipping to US buyers on your listings or set up a free shipping guarantee. A free shipping guarantee lets shoppers in the US know that they won’t pay added shipping costs on orders totalling $35 USD or over that ship within or to the US. Learn more about offering a free shipping guarantee on Etsy.

If you set up a free shipping guarantee in your shop, you can choose to adjust the prices of your items to recover shipping costs using our smart pricing tool. Sellers based outside of the US can find additional strategies for updating your prices to recover shipping costs here.

Setting a minimum order amount

Order minimums help incentivize buyers to purchase more from you. By including a $35 order minimum with your US free shipping guarantee, customers may be encouraged to spend more in your shop to obtain free shipping on their order. Measure the effectiveness of your free shipping guarantee by tracking your average order value, or the average amount each customer spends in your shop.

To determine how your free shipping guarantee impacts your average order value over time, first calculate your current average order value. Download the CSV file of your orders and use the formula function of your spreadsheet to calculate the average of the amounts in the column labeled “Order Value.” With a free shipping guarantee, your goal should be to boost your average order value. For instance, if your current average order value is $25 and you make the minimum shoppers must spend to qualify for free shipping $35, tracking changes in your average order value on a monthly basis can help determine whether it’s an effective strategy for your shop.

Free shipping can be a powerful marketing tool for your business. It has the potential to add value to your product, make you stand out from your competitors, and incentivize repeat purchases. “It all comes down to helping the buyer make a decision,” says Rebecca. “They’re just a click away from making a purchase, and I want to lower that hurdle for them.”