Free shipping hides losses
Community signal
Free shipping is not free. You still pay the carrier; on thin-margin or small orders that cost can exceed the profit.
In real life: A free-ship offer lifts conversion, but the average order is small and the carrier cost wipes out the margin.
Shopify / DTCShopeeTikTok ShopLazada
Data you need
- requiredCarrier cost per order. What you actually pay to ship.
- requiredOrder margin before shipping. To see what shipping leaves behind.
Formula
Post-shipping margin
Contribution Margin - Shipping PaidIf this is negative on free-ship orders, the offer loses money.
Key insight
- Free shipping converts but can invert margin on small baskets.
- A minimum-order threshold protects the offer.
Action checklist
- 1Measure post-shipping margin on free-ship orders · medium · 30 min
Per order, not blended. - 2Set a free-ship minimum basket · easy · 30 min
Above the break-even order value. - 3Exclude heavy or far orders from free ship · medium · 1 day
They lose the most.
Money impact · Protect margin
Keeps a free-shipping offer from converting at a loss by gating it behind a profitable basket size.
Common mistakes
- Offering free shipping with no minimum.
- Judging the offer by conversion only.
How Okiela helps
Shipping in per-order true profitlive
Okiela subtracts real shipping per order so free-ship losses are visible.
Trust & sources
- Community signalFree-shipping margin trap is widely reported
Last reviewed 2026-06-22 · Confidence 4/5