Free shipping threshold
What is a free shipping threshold?
A free shipping threshold is the order value above which the shop pays the courier instead of the customer — free delivery over €70, say. The number comes out of the average order and the margin: high enough that the added item covers the delivery, near enough that the customer puts one more thing in the basket instead of leaving.
Example
The average order is €54, the margin is 40 per cent, and delivery costs the shop €5. With the threshold at €70 the customer has to add about €16; that brings €6.40 of margin against €5 of delivery, so €1.40 more than the order would have left on its own.
At €120 the sum changes: the gap is too wide, nobody chases it, and the order stays at €54 with delivery paid on top — or does not happen at all. The working rule is a threshold 20 to 30 per cent above the average order, after which the number is tested in the shop rather than argued about.
The threshold has to be visible in the basket. “Add €16 more for free delivery” does more than a rule buried on a delivery page. The result is read in the average order and in the conversion rate at the same time, because one can rise at the other’s expense.
Why it matters for a business
Delivery is the last cost a customer sees, and it is where baskets are abandoned. A threshold turns that cost into a target: instead of “plus €5” the screen says “€16 to free delivery”.
The cost still sits with the shop. A low threshold means free delivery paid out of the margin on orders that would have happened anyway. A high one changes nothing at all. So the threshold is a number to revisit whenever courier rates or the range change.
Count returns in as well: the courier is paid whether or not the customer sees a delivery charge, and on a withdrawal the shop refunds the standard delivery the customer did pay. Bulky and heavy goods often need a threshold of their own. These rules are set in the shop itself — online store development.
How to improve it
- Know the average order and the margin by category before putting one number on the whole shop.
- Show the remaining amount in the basket, and suggest items that cover it.
- Exclude bulky and heavy goods, or give them their own threshold.
- Check how the threshold behaves with a discount code: does the reduced total still count?
- Change the number rarely, and on evidence rather than after every campaign.