#marketing-cx-cs-retention
Thread
Does anyone have experience testing the impact of free shipping thresholds on AOV?
An ecommerce client has a median AOV of £22, but a free shipping threshold of £49.99. Average price is around £3 and avg items in basket 6. Gross margin 65% and shipping is £3.99
I thought you’d want the free shipping threshold to be just above the median, to encourage people to add a couple more items. In this case, the median customer would have to over double their order…
Of course by lowering it, a lot more people are going to qualify for free shipping. But that should provide quite a boost to conversion rate?
Yeah we did some testing on this. As a rule of thumb you want the threshold to be 15-20% higher than the Modal average, that encourages people to spend a little bit more to hit that.
Of course it all depends on the brand and the numbers but if someone just has to add 1 more item to cart to hit it that’s perfect. You never want someone left with <£1 to go.
Happy to chat about it, at the pub now 😂
That’s a really helpful opinion. Our store has two hero SKU’s with the same $45 price point. I was going to add a product with a $15 price point and offer free shipping on $100.
I’ll probably test free shipping on $85+ first…
We offer FS in both CA and US customers who spend above $150 / $100 respectively. Our top sellers are $99-$120 so we feel like this is a good spot (the 20% mentioned above). We also have accessories under $20 so I am always baffled when customers choose to pay the $9.99-$19.99 for shipping instead of grabbing another product for like $2. I'd say 90% of our customers always qualify for FS - AOV is about $170 CAD / $150USD
@Zachary Cannon @Will Laurenson @Sean Eidson @Kanish Jain
Do you think there is any benefit to offering free shipping on all orders and just raising the price of your item by $5? I’m wondering if “free shipping on all orders” increases the value of the offer beyond “free shipping over $50" threshold
@Alexander Klein possibly, but you risk selling more at lower pricing and so shipping is going to cut in.
I do think there's a benefit of being able to say "you've unlocked free shipping" once people hit a certain value threshold
Hey @Alexander Knakkergaard it’s a bit more complex then that. Just to be clear I’d suggest using looking at both modal and mean AOV to make a decision on this. It’s going to be brand and business model dependant.
Free shipping alone is just one AOV lever. It’s unlikely that your AOV will then reach the free shipping threshold, as you’ll still have plenty of people who won’t buy extra to hit the target.
Unless of course you came out with some insane bundle offers that were just a no brainer instead of what they were buying anyway, but if you build that out right you’d probably offer free shipping on the bundle anyway.
You could then test raising the threshold, but it all depends on whether people are spending more on items they genuinely do want, or if they’re buying little add-ons to hit the target, in which case raising the threshold would most likely have a negative impact.
It’s all case by case really