Online clothing shoppers have come to expect free shipping and easy returns. For a small brand, those expectations mean real costs on every order that never appear on the product cost sheet. If you do not build them into the price, you pay them out of margin. This article shows how to set a sustainable free-shipping threshold and how to include the cost of returns in the prices on your own web shop.
The logistics cost of an online order
For every order shipped, an online clothing shop typically bears:
- courier charges, paid in full or in part;
- dispatch packaging: mailer or box, label, void fill;
- time spent packing;
- payment processing fees or the cost of cash on delivery;
- a share of the cost of returns.
Add these up for a month and divide by the number of orders. The result is your real logistics cost per order, the starting point for every decision below.
What returns really cost
A return costs far more than the postage back. Include:
- return shipping, if you pay it;
- outbound shipping, which you do not recover;
- time spent checking, reconditioning and repacking;
- items that can no longer be sold as new;
- the cost of processing the refund.
A hypothetical example: a shop takes 300 orders a month and 12% of them come back. Each return costs 30 lei on average. Monthly returns cost 36 × 30 = 1,080 lei, or 3.6 lei per order shipped. That amount belongs in your pricing like any other cost.
Setting the free-shipping threshold
The threshold has two jobs: to cover shipping and to raise average order value. The steps:
- Find your current average order value. Let's assume 140 lei including VAT.
- Calculate logistics cost per order. Let's assume 18 lei for shipping and packaging.
- Set the threshold a little above average order value, usually by 20–40%, so that many customers add one more item. In the example, a threshold of 179 or 199 lei.
- Check margin at the threshold. On a 199 lei order, after removing VAT, product costs and 18 lei of shipping, the margin must still be acceptable.
- Track the effect on average order value for two to three months and adjust.
Below the threshold, you can charge a flat fee covering some or all of the shipping cost.
Building it into the product price
The alternative to a threshold is permanent free shipping, built into every product's price. The simple formula:
- Price excl. VAT = (Product cost + Average logistics cost per piece + Average return cost per piece) / (1 − Target margin)
If an average order holds 1.5 pieces, logistics cost per piece is 18 / 1.5 = 12 lei and returns 3.6 / 1.5 = 2.4 lei. For a T-shirt with a landed cost of 30 lei and a 50% target margin, the price becomes (30 + 12 + 2.4) / 0.5 = 88.8 lei excluding VAT. Without logistics costs it would have been 60 lei. The gap shows how much these costs matter online.
Reducing returns
The most common clothing returns come down to size, colour and expectations about the fabric. Effective measures:
- a size chart with the garment's real measurements, not a generic one;
- photos in natural light that show colour accurately;
- a clear description of weight, composition and hand feel;
- consistent fabric from lot to lot, so the product received matches the photos.
The last point is often underrated. A brand colour that varies visibly between lots generates complaints and returns. That is why, for a signature colour used across a collection, a single planned dye lot is valuable. We would use our 160 g/m² emerald green single jersey, made to order from 150 kg per colour: one large, uniform lot gives the same shade on every product in the season, and the light-to-mid weight keeps parcel costs down. For other shades, see the 220-colour card or the single jersey family.
Common mistakes
- offering free shipping without knowing the real cost per order;
- a threshold below average order value, which changes nobody's behaviour;
- leaving the cost of returns out of the price;
- very generous return policies with no analysis of return reasons.
To work out the full product cost you start from, send a quote request for your collection's fabric.
The figures in the examples are hypothetical and only illustrate the calculation. They are not Alteks Tricot prices: we quote the price per kg of each article on request, usually the same working day. Ask for a quote
Frequently asked questions
Do I have to offer free returns to online customers?
Distance-selling law gives consumers a right of withdrawal, but it does not necessarily require return shipping to be free; the conditions must be stated clearly before purchase. Check the exact rules and time limits with ANPC or a legal adviser.
How often should I change the free-shipping threshold?
Not often. Leave it unchanged for at least two to three months to see the real effect on average order value. Revisit it when courier costs, product prices or the shape of your range change.
Is free shipping worth offering only during campaigns?
Yes, it can be a cheaper alternative to percentage discounts. A free-shipping weekend costs only the shipping on orders in that period, while a 20% discount applies to the whole basket. Work out both options before the campaign.
