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Can a free gift break the discount habit?
Are you teaching your customers never to pay full price?
We analysed 16.8 million Shopify orders to see when a free gift beats a discount, when it doesn't, and how big the effect really is. The answers are less flattering than most gift-with-purchase marketing, and more useful.
In the median store, orders that picked up a gift were 45% larger than its other orders. But a spend threshold only lets large baskets in, so much of that gap exists by design. When we tracked stores that started gifting, their overall average order value rose about 1.2 points more than stores that didn't. That is the number to plan around.
Four in ten spend thresholds were set below the store's ordinary basket. Below half the ordinary basket, 28% of orders got a free gift and those baskets were only 8% bigger: gifts for orders that were already that size. Higher thresholds show bigger gaps, mostly because they only admit bigger orders, while the share of orders reaching the gift held in a narrow 12–16% band up to twice the ordinary basket.
Among comparable thresholds, gifts worth up to half the spend bar showed similar gaps, and gifts worth more than half showed smaller ones. Retail value isn't what a gift costs you, so look for something that feels generous and costs little, and show its normal price.
The strongest study on the question (Foubert and colleagues, 2018) found free gifts lift purchases less than an equivalent price cut. Gifts can still win on profit because they cost less, and they suit treats more than refills. The paper sets out when to use each, with a worked break-even example: at a 50% margin, 10% off needs a quarter more orders just to stand still.
An 11-page PDF for Shopify merchants and anyone who advises them. Inside:
Written by 506, which makes EasyGift, the Shopify app whose anonymised order data the paper analyses. No store, merchant or customer is identified.
