Should You Keep Offering Free Shipping in 2025?

Free shipping has long been one of the most powerful tools in e-commerce, enticing customers to complete purchases, reduce cart abandonment, and drive loyalty. Yet in 2025, many brands are facing a tough question: should you keep offering free shipping, and if so, how can you afford it without hurting your margins?

At Advanced International Freight, we work closely with e-commerce businesses to navigate this delicate balance between customer expectations and rising logistics costs. Let’s explore why free shipping remains essential in 2025, the challenges it brings, and how smart logistics strategies, particularly around last-mile delivery, can help brands keep offering it without sacrificing profitability.

Why Free Shipping Still Matters

Free shipping continues to be a powerful driver of customer behavior in 2025. Surveys consistently show that high shipping costs are one of the top reasons shoppers abandon their carts. More than 80% of U.S. shoppers now expect free shipping if they spend above a certain amount. Many customers will even add extra items to their cart to qualify for free shipping, making it a valuable tool for increasing order values. For new or emerging brands, offering free shipping can also signal reliability and build trust, helping them compete against giants like Amazon that have set the standard for low-cost, fast delivery.

Why Free Shipping Hurts Margins

Despite its marketing power, free shipping is far from free for businesses. Costs tied to warehousing, picking, packing, and especially last-mile delivery have all risen sharply in recent years. Higher labor costs, fuel price increases, tariffs, urban congestion fees, and inflation across the supply chain have all contributed to the challenge. For many e-commerce brands, the cost of shipping a “free” order can significantly erode margins, especially on low-margin products, bulky items, or deliveries to remote areas. In some cases, shipping costs can even exceed the profit on the products sold.

How Last-Mile Delivery Affects Your Free Shipping Strategy

Last-mile delivery is often the most expensive part of the shipping process, sometimes making up 40-50% of total logistics costs. The final leg of a product’s journey involves multiple handoffs, localized routes, and frequent stops, all of which add time and expense. However, last-mile delivery can remain financially viable even when offering free shipping, if businesses approach it with the right strategy and partners.

Work with the Right Carrier Mix

Many e-commerce businesses rely heavily on national carriers like UPS, FedEx, or USPS because of their wide coverage and reputation for reliability. However, these carriers may not always offer the most cost-effective rates for every shipment. Successful brands in 2025 are increasingly combining national carriers with regional delivery services, which often offer lower rates in specific metro areas or states. Crowdsourced delivery services are also becoming a popular option for handling local, same-day, or next-day deliveries at a lower cost. Hybrid models, where freight partners manage the middle mile and local carriers handle the final delivery leg, are helping many brands reduce costs and improve delivery speed. Choosing the right carrier mix allows businesses to match delivery options to the specifics of each shipment, controlling expenses while keeping customers happy.

Set Minimum Order Thresholds

Setting a minimum order value for free shipping is one of the most effective ways to protect margins without sacrificing customer expectations. Encouraging customers to spend more per order helps spread shipping costs over a higher revenue base, reduces the frequency of small, low-value shipments, and increases the average order value (AOV). The ideal threshold varies by product type, customer behavior, and market conditions. Some brands are now experimenting with regional thresholds to better align free shipping policies with local shipping costs.

Use Zone Skipping and Consolidation

Brands shipping products nationwide often pay higher rates when sending single packages long distances through standard parcel networks. Zone skipping and transloading strategies help reduce these costs by moving goods in bulk closer to the final delivery regions before handing them off to last-mile carriers. This approach allows brands to avoid shipping through multiple zones, which cuts costs and shortens delivery times. For high-volume products with predictable demand, this strategy can significantly reduce per-package shipping expenses.

Leverage Data to Optimize Shipping Decisions

Modern logistics systems provide brands with detailed data on shipping costs, carrier performance, and customer delivery patterns. Analyzing this data allows businesses to make smarter decisions about when and where to offer free shipping. For instance, brands can identify regions where offering free shipping remains profitable, or where surcharges may be needed to cover higher delivery costs. Data-driven insights help ensure that free shipping remains a valuable marketing tool rather than a drain on margins.

Offer Sustainable Shipping Options

Sustainability has become a priority for many consumers, and in 2025, more shoppers are willing to wait a bit longer or pay a small premium for environmentally friendly shipping options. Brands can offer carbon-neutral delivery, slower “eco-friendly” shipping tiers, or consolidated shipments to help reduce the environmental impact of last-mile delivery. These sustainable shipping options not only appeal to eco-conscious customers but can also help manage costs while aligning with brand values.

When Free Shipping Might Not Make Sense

Despite its advantages, free shipping isn’t always the right choice for every product or customer segment. Large, bulky, or heavy items often come with high shipping costs that can outweigh the profit on a sale. Deliveries to rural or remote areas may incur significant surcharges, making free shipping financially unsustainable. Brands selling low-margin products may also struggle to absorb shipping costs without sacrificing profitability. In such cases, businesses might explore alternatives like flat-rate shipping, dynamic pricing at checkout, or subscription programs that offer free shipping only to members.

Should You Still Offer Free Shipping in 2025?

Free shipping remains a crucial part of the e-commerce customer experience, but it is no longer a one-size-fits-all solution. Brands must tailor their approach based on careful cost analysis, diversified carrier networks, and smart fulfillment strategies that keep expenses in check. The good news is that last-mile delivery can still be viable, even in a free shipping model, when businesses work with the right partners and rely on data-driven decision-making.

At Advanced International Freight, we help e-commerce brands optimize their shipping strategies for today’s demanding market. Whether you’re considering keeping your free shipping offer or rethinking your last-mile delivery network, our team is here to help you stay competitive and profitable in 2025 and beyond.

Contact us today to discuss how we can help you craft a smarter, more sustainable shipping strategy.

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Frequently Asked Questions (FAQs) about Free Shipping

Is free shipping still necessary for e-commerce businesses in 2025?

Yes, for many brands, free shipping remains essential. Customers have come to expect it, and surveys consistently show it helps reduce cart abandonment and boost average order value. However, brands need to be strategic about when and where they offer it to avoid eroding profit margins.

How can I afford to keep offering free shipping without losing money?

Brands can protect their margins by setting minimum order thresholds, using regional carriers for lower rates, leveraging data to identify profitable shipping zones, and exploring zone skipping or forward-staging inventory. A blended carrier strategy and careful cost analysis are key.

Does offering free shipping mean I have to ship everything fast, like next-day?

Not necessarily. Many customers are satisfied with free shipping that takes 3-5 days, especially if they’re given clear expectations upfront. Offering faster shipping as a paid upgrade can balance speed and cost.

Should I use regional carriers instead of national ones?

Regional carriers can be significantly more cost-effective for certain areas, particularly for high-density urban deliveries. They often offer lower rates and flexible service levels compared to national carriers, but they may have limited geographic reach.

Is free shipping viable for all products?

No. Free shipping can be challenging for bulky, heavy, low-margin, or fragile items that are costly to ship. In those cases, brands may choose flat-rate shipping, surcharges for certain zones, or shipping costs calculated at checkout.

What is zone skipping, and how does it help?

Zone skipping involves moving inventory in bulk closer to major customer hubs before handing it off to local carriers. This reduces the number of shipping zones a package travels through, lowering costs and speeding up delivery times.

Should I eliminate free shipping altogether?

Not always. Removing free shipping entirely can hurt conversion rates and customer loyalty. Instead, many brands adjust their free shipping strategy by using thresholds, offering it only on selected products, or limiting it to certain regions.

How do I know if free shipping is profitable for my business?

Calculating true cost-to-serve is critical. Analyze your shipping costs by region, carrier, and product type, and compare them against your margins. Testing different free shipping thresholds can also help you find the balance between sales volume and profitability.