In June 2025, Mercado Libre lowered the minimum order value for free shipping from R$79 to R$19 . This was a direct response to the competition with Shopee and the arrival of TikTok Shop , according to analysts at Itaú BBA , and a sign of how far retailers are willing to go to avoid losing sales due to delivery issues. Free shipping has become a standard expectation, but the cost still exists.
For digital retail, the decision to offer this benefit is no longer a mere operational detail, as it impacts the average order value, conversion rate, and, most importantly, the remaining balance at the end of each order.
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Free shipping: what's really at stake?
- It is the main criterion for choosing a store for 56% of Brazilians.According to the Multichannel Consumption 2025 survey by CNDL and SPC Brasil, this factor weighs more heavily than price for a large portion of consumers.
- High delivery costs are the biggest reason for shopping cart abandonment. Approximately 48% of consumers abandon their purchase due to extra costs such as shipping, according to data compiled by Statista (2024);
- Speed doesn't compensate for cost. 51% of consumers never pay extra to receive their order faster (CNDL/SPC Brasil, 2025); what most people want is to avoid paying for shipping and speed.
- Someone always pays the bill. Free shipping is a cost absorbed by the store, subsidized by the marketplace, or included in the price. Ignoring this is what erodes the profit margin.
- The minimum value is the central tool. 80% of consumers are willing to pay a minimum amount to get free shipping (Deloitte), which turns this benefit into a way to increase the average order value.
Why free delivery converts so much
The expectation is already set. Years of marketplaces and subscriptions with included delivery have accustomed consumers to treating free shipping as standard, not as a courtesy. When it doesn't appear, the purchase stalls: the 48% abandonment rate due to extra costs ( Statista, 2024 ) shows that the shipping cost at checkout is one of the most fragile moments in the journey.
In Brazil, data from CNDL and SPC Brasil reinforces the importance of this variable. In addition to the 56% who cite free shipping as a primary criterion , 57% of consumers abandoned a shopping cart in the last three months , and shipping costs are often at the heart of these abandonments. Offering free delivery, in this scenario, removes one of the biggest obstacles between clicking and making a purchase.
That's why free shipping works so well as a conversion trigger. And that's also why it becomes a trap when offered without criteria.
When free shipping destroys the margin.
The problem isn't free shipping, it's offering it without knowing how much it costs per order.
A simple example illustrates this. A product sold for R$60, with an actual shipping cost of R$25, leaves little to no margin after deducting the product cost and transaction fees. If the store subsidizes this shipping on all orders, each low-ticket sale becomes a loss, and the volume, instead of helping, accelerates the loss.
There's another tax detail that many stores forget: the shipping cost included in the price is factored into the tax base for taxes like ICMS, PIS, and Cofins . In other words, "absorbing the shipping cost" doesn't just mean paying the shipping company. It means paying more tax on that amount.
The case of Mercado Livre shows the other side of the coin. By lowering the minimum order to R$19, the marketplace absorbed the heavy burden of this cost, passing on shipping cost reductions to sellers, but maintaining free shipping as a competitive incentive. Few retailers have the cash flow to sustain a universal subsidy of this size. Replicating the strategy of those operating on a billion-dollar scale, without the same structure, is the shortest path to a negative margin.
How to offer free shipping without sacrificing profit margin.
The solution is not to abolish free shipping, but rather to make it conditional. Well-calibrated strategies maintain commercial appeal and protect profitability.
| Strategy | How works | When to use |
|---|---|---|
| Minimum value (threshold) | Free shipping above a minimum order value defined by the margin. | A pattern to increase the average order value without subsidizing small orders. |
| Shipping included in the price. | Cost diluted in the product value. | Categories with generous profit margins and full-price competition. |
| By region/ZIP code | Free where delivery is cheap; charged where it's expensive. | Operations with significant variation in logistics costs by region. |
| By category or campaign | Free on high-margin items or on specific dates. | Controlled promotional activities and inventory turnover. |
The minimum order value is the most effective leverage. According to Deloitte , 80% of consumers are willing to complete a minimum order to avoid paying for shipping, and setting this minimum slightly above the current average order value pushes the cart up without squeezing the margin . The common mistake is setting a value below the actual cost of delivery, which simply transfers the loss to the order itself.
Metrics that tell you if free shipping is worth it.
Free shipping shouldn't be evaluated solely by conversion rates. It's important to track the average order value before and after establishing a minimum value, the contribution margin per order (not just the gross margin of the product), and the checkout abandonment rate . If conversion increases but the contribution margin remains negative, the free shipping offer is buying sales that are generating losses. In that case, the signal is to adjust the minimum value, not celebrate the volume.
Free shipping is a margin decision, not a marketing decision.
Free shipping is no longer a differentiator but an expectation, but it remains a cost that someone needs to pay. The stores that grow with it are those that treat the decision as a margin calculation: they define a reasonable minimum value, measure the contribution margin per order, and adjust the benchmark whenever the numbers demand it. Well-calibrated, free shipping sells more and protects the bottom line. Poorly calibrated, it does the opposite of both.
To delve deeper into the relationship between shipping costs, price, and profitability, it's worth exploring other content on the e-Plus blog about pricing and margin management in e-commerce.
FAQ – Frequently Asked Questions
What does free shipping mean in e-commerce?
Free shipping is a method where the consumer does not pay for delivery at checkout. However, the cost does not disappear: it is absorbed by the store, subsidized by the marketplace, or included in the product price. From the retailer's point of view, it is a commercial strategy, not a cost-free service.
Is free shipping worthwhile for the retailer?
It's only worthwhile when it's conditional. Offered on all orders, without a minimum value, it tends to erode profit margins, especially on low-value items. With a well-calculated minimum purchase amount, free shipping increases the average order value and conversion rate, transforming a cost into a revenue driver.
What is the ideal minimum order value for free shipping?
The ideal minimum order value should be slightly above the store's current average order value and cover the actual cost of delivery. Deloitte points out that 80% of consumers are willing to pay a minimum amount to get free shipping. Setting this minimum below the shipping cost negates the benefit and generates a loss per order.
Does free delivery increase sales?
It increases conversion rates because it removes one of the biggest reasons for shopping cart abandonment: extra costs, which account for about 48% of abandonments (Statista, 2024). But selling more is not the same as making more profit: without margin control, higher volume can mean greater losses.
