Should I Offer Free Shipping on Etsy (How to Do it Without Losing Money and Get Etsy Search Boost)

Last Updated:

July 11, 2023


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Starting July 30th 2019, Etsy gives priority in US search results if you ship for free to the United States for orders of US$35 or more.

As you may have seen on Etsy forum, many sellers on the platform aren’t happy about it as it could affect their search rankings and profit margins if they don't comply.

This post runs you through the reasons why Etsy does that, what it means to you, and how can you use it to your advantage.

Why Is Etsy Pushing Free Shipping?

To compete with Amazon. Program like Amazon Prime offers free shipping to customers and have gained significant market share over the past years.

As a major competitor of Amazon, it makes business sense that Etsy would want to offer the same benefit to its shoppers, even at the cost of individual crafters.

Etsy also has conducted experiment in the marketplace and found out that shoppers are willing to pay more for the product if they don't have to pay shipping prices. Also they are less likely to abandon their shopping carts as there's no hidden extra fees during check out.

Etsy shoppers are able to filter listings offering free shipping

Does Offering Free Shipping Boost Your Etsy Search Ranking?

As of July 30th, 2019, Etsy changes the search algorithm to give priority to product listings that offer free shipping over $35 or more.

This priority placement in Etsy search also applies to individual products that offer free shipping, which means that you can experiment with free shipping with just a few products and see if it makes sense to your business.

The free shipping means free 'standard' shipping fee here. That means you can still charge extra for 'shipping upgrades' like first class or express shipping without affecting the priority search placement.

This doesn't increase your Etsy fee, because the transaction fee is charged on both the product price and the shipping. So given the total amount that you charge is the same, your Etsy fee will be the same.

This only affect US buyers at the moment, but it's very probable that Etsy will extend this practice to other countries if it increases their overall revenue.

Shops offering free shipping also get a green badge underneath their listings

Problems With Refunds & Returns Of Orders

Returns are inevitable in the long-run. Some customers wouldn't be completely satisfied with the product and would want to return it for a refund.

In this case, I would recommend charging a restocking fee and/or ask them to cover the postage when they post the product back to you. Be sure to include that in your shop policy for clarity to customers.

Do You Need To Offer Free Shipping?

For sellers that have most sales coming from the US, no matter whether your shop is based in the US or not, you need to seriously consider offering free shipping:

Because offering free shipping on Etsy will boost your search ranking, you should offer it and find ways to offset the increase in cost. Most of the listings on the search results on the first page are ones that have free shipping guarantee.

There are only a few scenarios that you don’t have to offer free shipping:

You Bring In Most Traffic From External Sources

If your shop brings in most of the traffic from external sources like social media and blog, and those traffic is enough for your shop to thrive, then you can still charge a shipping fee if it affects your bottom-line too much.

Heavy Items

Sellers shipping heavy items are hit the hardest in this situation because of the high cost of shipping, especially if you are overseas from the US. This also affects items like vintage items.

If your item price is not very high (under US$100), then offering free shipping probably doesn’t make sense to you. And many of your competitors shouldn’t be able to offer free shipping sustainably.

But if your item is mid-range or high-end, then I would suggest to charge more for the product and offer free shipping. Consider using more premium material or better after-sale care service in order to justify the increase in price.

You Are In A Low Competition Niche

If you are in a very, very small niche with only a few sellers, you don't have to offer free shipping as you are most likely already ranking on the first page.

How To Offer Free Shipping Without Losing Money

Increase Product Price Without Losing Customers

You probably have heard of the example by now: Two products, one is $10 with $10 shipping, and the other one $20 with free shipping. Customers are likely to value the latter one with a higher value even though they may be the same products.

Higher price is sometimes linked to higher value, given that you have good photos, policy, packaging, etc.

So, increasing your product price may be a good thing in the long run to have a higher perceived value for shoppers.

If your shipping cost is about US$5 and your product is at least $30, just increasing the price by the shipping cost won’t affect your sales much.

However, if your shipping cost is higher than that or your product price is lower. You need to put in more thoughts of how to increase the price without scaring off customers.

Here is how to do it smartly.

In 2018, I used this technique to increase my average product price from about US$20 to US$40.

This makes me one of the more premium options in my jewelry niche.

So what did I do? I offer a better product to justify the increase in price, and communicate that to the customer.

I did these things to justify the increase in price:

One of the best inspirations of how to increase price effectively is to look at retail brands that sell at a higher price.

Analyze what benefits they bring, how they package their product, what kind of after-sale service they give, what quality guarantee they are able to give, etc.

Big brands are all about the entire shopping experience; That the customer feels good after the purchase.

If you can replicate that experience for your own shop, you can compare your product with those brands and charge a more premium price because you have more benefits for your customers.

Communicate The Price Increase To Customers

The best way to communicate the price increase to the customer is to focus on the positives. Instead of talking about the price increase, let them know how this change benefit the customer: A better product and a better experience.

Keep a positive and confident tone when communicating the change. And thank your customers for their continued support.

It could even be a good idea to keep the original price for a limited period of time to entice your existing customer to try out the new product.

Using Etsy Smart Pricing Tool

This tool is pretty useful if your shop has a large number of products. It automates the whole process of offering the free shipping guarantee by creating a new free shipping profile, and increases the price of products that are under or over $35.

It will most likely to tell you something like increasing the price by $0.47 or some non-whole number like that. In that case, I would recommend increasing by a whole number, like $1 or $2, which will make more sense to the customers.

Using Etsy's pricing tool to set a new price to offset the increased shipping fee

Testing Whether Free Shipping Makes Sense To Your Shop

Seeing How It Affects Your Search Results

Mark down your search ranking for your bestsellers before and after the free shipping guarantee. There is a chance that the free shipping guarantee doesn’t do much to your search ranking. There could be a few reasons, one of which could be that the sellers in your niche aren’t offering free shipping.

Calculate Overall Change In Profit

This is the bottom line whether offering free shipping makes sense to your store. Look at your shop's profitability over a period of time (recommended one month) and see if it has a significant change.

How To Turn Off Free Shipping On Etsy

If you decide that free shipping guarantee is not for your Etsy shop, turning it off is easy. Here's how to do it (click :

  1. From your Etsy dashboard, click 'Settings' on the left hand side menu
  2. Click 'Shipping settings'
  3. Click the 'US free shipping guarantee' tab
  4. Scroll to the bottom of the page and click "Yes, turn off guarantee".
  5. Click 'Turn off my guarantee' to turn off the US free shipping guarantee

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