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A luxury handmade glass brand launched promotional sales campaigns offering its buyers free shipping. While the conversion rate increased during such promotional drives, the team wanted to know if it increased enough to boost the overall store profitability (given the additional shipping costs that the store had to bear).

For an eCommerce store, it’s not just important to make more sales. It’s also important that the increased sales translate to more revenue — which may not always be the case.

For the brand, the real question (or the real test) was to find out if the free shipping offer raised the sales enough to offset shipping costs while still increasing revenue.

The client had been using a Free Shipping offer to drive sales and promotions. They knew the conversion rate increased during these times, but they didn’t know if it increased enough to increase profitability due to the associated increase in shipping costs.

Free shipping increases conversion rates even outside of promotional periods, and enough so that the increased volume will make up for the difference in shipping costs to the client.

Based on its hypothesis, a promotional bar to the store’s website offering free shipping for a limited time (on orders over $250) was added. The idea was to immediately get the visitor’s attention to the free shipping offer.

RESULTS

20% increase in revenue (99.26% confidence)

The test reinforced the idea that users don’t like to pay for shipping. The successful experiment showed that the brand could launch buyer-friendly shipping promos while actually making profits, in spite of the shipping costs.

SOURCES

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