In the ever-evolving landscape of e-commerce, businesses need to stay ahead of the game when it comes to attracting customers and driving sales. One powerful strategy that continues to prove its effectiveness is incorporating free shipping promotions into your marketing arsenal. As we delve into 2024, the allure of free shipping remains a potent force that can significantly impact customer behavior and propel your business towards success.

In this blog post, We will discuss some of the behavioral economic underpinnings of when and why free shipping can motivate consumers, provide best practices for planning and implementing free shipping promotions, and show how others do free shipping discounts at their online stores.

The psychology behind free shipping promotions

Other Retailers  implicitly sort their customers into two types: High Spenders, who already plan to spend over Minimum purchase limit, and Low Spenders, who do not intend to spend that much. 

For High Spenders, it is simple: they are already planning to spend at least minimum required amount , so they prefer a store that saves them money on shipping. People hate paying “extra” but love deals, so having a permanent free shipping program like Puspo Free can build customer loyalty. The real twist, however, is what is happening in the heads of the Low Spenders.

When a Low Spender sees the line “Free shipping on orders over X amount” next to the product price, it entices them to spend more. The lure of free shipping starts with the magical word free. 

Dan Ariely has studied the powerful allure of free and, in one of his papers, found that people do not treat a zero price like they treat costs in general. When people see something free, two things happen:

1. They forego the mental cost-benefit analyses usually associated with purchasing.
2. They actually perceive the benefits of a free product as higher than they really are. In other words, people overestimate the positive qualities of a free product, even when the freebie is just shipping.

While High Spenders see free shipping as a valuable convenience, to Low Spenders, that all-caps promise of free provides a compelling incentive to get their cart up to the target price. In other words, Low Spenders do not view free shipping as a perk but rather as a goal to be attained.

Overall, free shipping holds great importance due to its profound psychological impact on customers – among other things, it enhances the perceived value of a purchase. As a result, businesses that offer free shipping can effectively attract and motivate customers, leading to increased conversion rates and fostering long-term customer loyalty.