
The free shipping threshold is a textbook example of mental accounting in action
Been reading about why "spend $X more for free shipping" prompts work so well, and it traces back to Thaler's mental accounting research. People treat a shipping fee and an equivalent product price increase completely differently, even though it's the same money leaving the same account.
A 2007 study on a French clothing retailer found average basket sizes increased substantially once a free shipping threshold was introduced, not because people needed more, but because the fee was coded as a "loss" (Kahneman & Tversky's loss aversion) rather than normal spending.
Made a short breakdown of the mechanism if anyone's curious: https://www.youtube.com/watch?v=51tFJnKKeDM
Anyone know of other documented cases where retailers explicitly tested removing the threshold and measured the effect on average order size? Curious how consistent this finding is across industries.