How to Setup Discount and Free Shipping in Magento 2?

As a leading Magento extensions development company, we work with clients from across various industries. Nowadays, most clients are concerned about stagnant or declining sales. Since competition is at an all-time high, finding ways to maintain, let alone increase sales has proven a challenge.

Clients continuously ask us for ways to increase their Magento 2 store sales. Our response is always the same – there’s no best way to increase your sales since each store is unique. In other words, we need to first understand the dynamics of your store and then come up with a tailored strategy.

That being said, we do agree that there are certain strategies which can prove highly beneficial for every online store owner. One such strategy is ‘incentives’. The right incentives can compel your target audience to not just complete the current purchase, but also prefer your store over others for future purchases.

What Do We Mean by Incentives?

Naturally, the next question in your mind is what we mean by incentives. After all, it is a wide term and can encompass various aspects. Offering free products or discounts amount to incentives. However, they are no guarantee for success since the timing is equally crucial. When to offer these incentives or to whom matters equally.

However, for this article, our focus remains solely on the incentives rather than their timing. What we do know is that customers love discounts. Even if they are not interested in buying an item, the right discounts can compel them to buy it. At the same time, offering too many discounts can prove counterproductive.

For example, they can tarnish your brand’s reputation. The target audience may perceive your brand as low quality since you offer too many discounts. There’s also a possibility that they may never buy a product at the original price and would rather wait for you to offer a discount.

Our experience tells us that a good approach would be to choose a specific goal for each offer or discount, implement it on a small scale and assess the results to determine the compatibility of your overall brand strategy with the incentive being offered. If done right, incentives can be great for your business.

In this article, we are going to focus on two specific incentives – discounts and free shipping. Before discussing how to set up discount and free shipping in Magento 2, we need to understand the pros and cons associated with both. It will help you understand the two incentives in greater detail.

The Pros and Cons of Offering Discount Coupons

Pros

• As said earlier, everyone loves discounts. It is basic human psyche to save as much money as possible. When the target audience sees a discount on their desired item, they will be compelled to purchase it.
• Compared to other incentives, offering discount coupons is quite easy to set up. There’s no need for third-party extensions, although they can be helpful in adding advanced features.
• With more people visiting your store because of the discounts, there’s a high probability that they will interact with non-discounted items. This can increase the overall conversion rate and bring additional revenue.
• In case you have an overstocked product, offering discounts is the best way to get rid of it. This can bring the cost of holding inventory down. At the same time, it will free up valuable warehouse space.

Cons

• When it comes to discounts, it is widely accepted that they can reduce a store’s profit margins. For example, you offered an item for $25. The original cost is $18. After factoring into marketing and inventory holding expenses, the total cost per item comes to $21. Thus, you hope to earn a $4 profit. Suppose that the sales are not what you expected, prompting you to offer a $2 discount. Thus, the new product price is $23. Your profit will come down to $2. Over time, such low profitability can undermine your store’s financial viability.
• Another possible drawback is the damage to your brand reputation. The target audience may perceive your products to be of low value due to frequent discounts.
• Customers may no longer buy at full price if they become accustomed to offers.
• Discounts can contribute towards creating an occasional-buyer, price-driven customer base.

Therefore, when offering discounts, you need to be quite careful. You need to understand how to balance the pros and cons. On top of it, you need to get the timing right. If you offer discounts during a peak season, you are losing out on big profits. Therefore, undertake considerable research to determine when to offer discounts.

Setup Discount and Coupons in Magento 2

With the release of Magento 2, adding discounts or offers to store items has become even more user-friendly and highly customizable. These incentives can be broadly broken down into two categories:

1. Magento Catalog Price Rules (to selectively offer discount on specific products when certain conditions are met)
2. Magento Cart Price Rules (which are applied during checkout). The difference in configuration settings between both sections is minimal.

Follow this step-by-step process to offer discount coupons in your store.

a) Add New Rule

To setup the Magento Catalog Price Rules, login to your Magento Admin area and navigate to: Marketing > Promotions > Catalog Price Rules > Add New Rule.

From this submenu, you set the rule backend name, brief description, status (i.e. on/off), websites where rule is applicable and choose customer groups that can avail said promotion Magento discount/offer, etc. Further customization can be carried out by entering a From and To date (for offer validity period), determining whether promotion will be specific or non-coupon based, and by establishing a priority setup for the campaign. Coupon-specific options, such as number of uses per coupon and number of uses plus customer can be also set from here.

b) Conditions

The Condition tab from the left side menu allows store owners to add criteria to the promotion rules, based on the existing product characteristics (such as shape, size, color, etc.). To apply the rule to all products, the conditions should be left blank. Otherwise, determine a combination suitable for the rule by switching the All option to Any or the True option to False. Tap the Add button to set attribute value to which the condition will be applied, and click the ‘is’ link to choose between the two comparison operators (i.e. ‘is’ and ‘is not’). Expanding the more link allows merchants to set the attribute for the rule (e.g. Clothes). Further statements can be combined to the existing condition using the Add button again.

c) Actions

Move on to the Actions tab, which allows store owners to configure the discount method. There are four basic types of discounts:

• Percentage discounts (on basis of product price)
• Fixed discounts on product price
• Final price based on predefined discount percentage
• Set the final price to a fixed value (based on discount amount)

Now proceed to set the discount amount and the Discard Subsequent Rules (which should be switched to ‘Yes’ to stop the use of multiple discount coupons for same product by one customer).

Hit the Save button once all settings have been configured, and Apply Rules to confirm modification to Catalogue Price Rules. Normally it takes at least an hour for the rules to kick-in; so make sure to allow yourself plenty of time to apply and test out the new rule to ensure it is working desirably.

Pros and Cons of Free Shipping in Magento 2

Now, let’s focus on how to set up free shipping in Magento 2. Product discount and coupons aren’t the only type of incentives that reel-in more buyers. Money savvy customers are always on the hunt for overall most economical purchases (which includes product price and shipping charges).

Most shopping cart abandonment issues can be traced back to shipping fee issue; so why not counter that problem by offering Magento free shipping to encourage the customers to purchase. Based on your business model, free shipping can be offered for all shop items or specific products.

Alternatively, customers can be also offered individual shipping coupons. For example, offering repeat buyers a 50% discount on shipping. Before moving forward, we need to understand the pros and cons of this incentive. This will help you understand if this is something which you wish to implement in your store.

Pros of Magento 2 Free Shipping

• Just like discounts, free shipping is a strong incentive for people to complete their purchase. As said earlier, shipping-related charges is amongst the top reason for cart abandonment. Thus, you can reduce the cart abandonment rate for your store just by offering free shipping or setting up Magento 2 free shipping over certain amount.
• Free shipping can be seen as a ‘value addition’. When the target audience sees that a store is trying its best to facilitate the users, they reward it with greater loyalty. In other words, they are likely to become repeat buyers and promote your store to others.
• There’s no denying that eCommerce is a highly competitive market. By offering free shipping across the board or opting for Magento 2 free shipping over a certain amount, you can easily differentiate your store from others.

Cons of Magento 2 Free Shipping

• There’s a risk of abuse from the customers. They can place small orders which will increase the shopping costs for your store. In return, the profitability will be negligible, or you may even post a loss.
• Shipping costs are quite high already. When offering free shipping across the board or even opting for free shipping over a certain amount in Magento 2 can undermine your store’s profitability. Your expenses will be high while the income may be low. Over time, this may force you to close your store.
• If your target audience becomes accustomed to free shipping, they will hesitate to buy products without it. This can reduce sales in the long run.

Now, let’s turn our attention towards setting up free shipping in Magento 2.

Set Up Free Shipping in Magento 2

To start off, navigate to: Promotions > Cart Price Rules > Add New Rule.

Enter the Rule Name, Description and switch the status to Active. Choose a Customer Group to which the rule is applicable and if it’s desirable you can also set a code for the shipping coupon. Next, enter the number of coupons available and number of uses per customer to establish some constraints for the coupon. Set a coupon validity period and priority level (with zero being the highest) to determine in the order which the rules will be processed.

You can access more configuration setting from the Actions Tab in the left menu.

Lastly, in the shipping fee details, select “For Shipment with Matching Items” and hit the Save Rule button (in the upper right corner) to finish the setup of your shipping coupon. We recommend using our Magento 2 Free Shipping Bar Extension.

The extension helps keep customers informed about when they qualify for free shipping.

An example of the free shipping bar is shown in the above image. You can customise the bar to suit your own requirements.

Final Thoughts on Magento 2 Discount and Free Shipping

This concludes our article on how to set up discount and free shipping in Magento 2. These two are widely used strategies to improve a Magento 2 store sales. Of course, the strategies need to be tailored to your store’s unique requirements and target audience preferences. Regardless, these strategies have proven quite beneficial for most Magento 2 store owners. If you require help with setting up these strategies, reach out to our support team.

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• Configure Flat Rate Shipping Method in Magento 2
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• Set Magento 2 Shipping Restrictions