How Cashback and Free Ongkir Shape Gen Z Shopping Behavior

Cashback rewards and free shipping have become popular promotion tools for online retailers right now, but do they actually build lasting loyalty with Gen Z shoppers? The answer is more complex than you might think. 

While these incentives certainly drive purchases, understanding how and when they work and what really keeps Gen Z coming back is essential for any brand looking to win over this digitally-savvy generation.  

Furthermore, there is a need to differentiate the relative effectiveness of cashback versus free shipping and to identify the specific contexts in which each is most powerful. For Gen Z, a generation defined by digital fluency and high expectations for seamless online experiences, understanding their perception of these offers is essential for designing effective marketing and retention strategies.

To gain more understanding about this, we conducted research through AI-powered insight, AskLumia. 

How Cashback and Free Shipping Shape Gen Z Shopping Behavior

AskLumia allows you to research any topic you’re curious about, such as health, lifestyle, business, and more. You can get the answers you need in just a minute. 

For this topic, we started by asking a simple prompt: “Develop insights on how cashback and free ongkir shape purchase frequency, brand loyalty, and basket size among Gen Z shoppers.”

Core Research Findings

AskLumia’s analysis of the research provides a clear view into the motivations of Gen Z shoppers, revealing a distinct duality in their behavior and fascinating facts. Gen Z shoppers aren’t as simple as “discount-driven” or “values-focused”; they’re actually both, depending on the context. Here’s what really matters:

• Cashback and free shipping are significant transactional drivers for Gen Z, strongly influencing initial and repeat purchases by offering tangible monetary value. However, these incentives do not, by themselves, cultivate deep-seated brand loyalty. True loyalty for this generation is primarily rooted in factors such as superior product quality, fair pricing, and a brand’s alignment with their personal values, including sustainability and ethical practices. Promotions are viewed as valuable perks that enhance the overall brand experience rather than being the foundation of the relationship.
• Free shipping is not just a promotion but a powerful expectation among Gen Z shoppers, and its absence is a primary driver of cart abandonment, with 40% of consumers forgoing purchases if it isn’t offered. This incentive is often more effective than cashback at increasing conversion rates and encouraging larger basket sizes, as consumers are motivated to add more items to meet free shipping thresholds. The immediacy of avoiding a direct shipping fee at checkout makes it a highly influential factor in the final purchase decision.
• Gen Z’s shopping habits are characterized by high frequency and moderate basket sizes, with an average spend of around $28 per trip. Their path to purchase is heavily influenced by social media, where they discover brands and seek social proof. Correspondingly, loyalty programs that offer tangible rewards are effective, with 48% of Gen Z participating in them, leading to increased customer satisfaction and a higher likelihood of repurchase.

Strategic Ways to Engage Gen Z with Promotions and Loyalty

When conducting research with AskLumia, you don’t just get insights but you also receive clear top-line recommendations to help you take strategic action immediately.

Based on these findings, AskLumia has developed a set of strategic recommendations to help you effectively engage Gen Z consumers. This framework focuses on leveraging promotional offers to drive short-term metrics while simultaneously building a foundation for lasting brand loyalty and customer value.

Building Gen Z Loyalty Beyond Discounts

Adopt a dual-strategy approach that separates transactional incentives from brand-building initiatives. Utilize cashback and free shipping to drive conversions and repeat purchases, but invest heavily in communicating your brand’s core values, commitment to quality, and ethical practices to foster genuine, long-term loyalty. 

Ensure that your loyalty programs reward engagement and shared values, not just spending, to build a more resilient and authentic connection with Gen Z consumers.

Boosting Orders with a Free Shipping Strategy

Position free shipping as a standard, baseline offering to meet Gen Z’s expectations and minimize cart abandonment. Strategically implement minimum order value thresholds to qualify for free shipping, which encourages customers to increase their basket size. 

This transforms the shipping cost from a potential deterrent into a tool for boosting average order value while simultaneously improving the customer experience.

Maximizing Loyalty with Social Media Promotions

Leverage social media channels to amplify the visibility and appeal of your promotional offers, including cashback and free shipping deals. Integrate these incentives into engaging social media campaigns to capture Gen Z’s attention and drive frequent purchases. 

Furthermore, design loyalty programs with clear, attainable rewards like cashback to cater to their desire for tangible value, which will enhance satisfaction and retention for this high-frequency, digitally-native shopping segment.

Building Lasting Connections Beyond the Discount

Cashback and free shipping aren’t just nice to have anymore, they’re key tools to engage Gen Z. But they work best alongside genuine brand values and great experiences. Use these offers to attract customers and earn their loyalty with real value.

Gen Z will respond to your cashback offers and free shipping deals when they’re ready to buy. But their real loyalty comes from whether they actually like your products, trust your brand, and feel like you share their values. 

Free shipping is now expected and helps prevent cart abandonment, while cashback acts as a strong reward in loyalty programs. Success comes from balancing short-term promotions with meaningful brand-building that aligns with Gen Z’s desire for authenticity and value.

Ready to dive deeper into consumer insights that can transform your strategy? Conduct research through AskLumia now!

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