Free shipping has been a powerful incentive for a long time in e-commerce, but the landscape is shifting. A growing number of businesses, particularly smaller and midsize retailers, are ending blanket free shipping offers or raising the free shipping threshold. This change is largely driven by rising operational costs, including higher shipping rates and increased import tariffs.
Carriers have steadily raised delivery prices in recent years, with average shipping costs now exceeding $12 per package. At the same time, new tariffs, especially on goods imported from China, are putting additional pressure on profit margins. For many small businesses, the combination has made it unsustainable to continue offering free shipping on low-margin products.
As a result, brands are revising their strategies. Some have significantly increased the minimum order amount for free shipping, while others have introduced flat-rate shipping fees unless customers join loyalty programs. In more extreme cases, companies have eliminated free shipping entirely. For example, Modern Picnic, a boutique accessories brand, recently doubled its free shipping threshold from $150 to $300 in response to growing fulfillment costs. Similarly, Home Depot raised its free shipping minimum to $45 for standard items as a response to rising carrier rates and logistics costs. Kuru Footwear, a comfort based shoe brand, now only offers free shipping to members of its loyalty program and charges an $8.99 fee to non-members. The common goal is to offset rising costs without having to raise product prices across the board.
This shift is already impacting consumer behavior. Industry data shows that the average order value required to unlock free shipping has increased notably over the past year. There’s also evidence that higher fees at checkout lead to more abandoned carts, particularly when shipping costs are introduced late in the buying process.
While large retailers may still offer free shipping to maintain a competitive edge, the broader trend suggests a recalibration. For many brands, adapting their shipping policies has become a necessary move to preserve margins and operational stability.