The Death of Free Shipping
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A quick look at eBay auctions for a given item will reveal (quite quickly) an interesting phenomenon: eBay Sellers will list the same item several times over with different prices, and different shipping costs. They often add up to the same total cost, but clearly buyers have different tolerance thresholds for what they'll pay for shipping vs what they'll pay for a product.
Much like with anything else that's "free", it's not free. Someone else is just paying for it (and sometimes that someone is just you)
Everyone understands that you still pay for free shipping. That’s not the point though. If you have prime your stuff ships first. If you don’t — you pay for shipping and/or have to wait longer. Sometimes on purpose, sometimes not.
And then there is a massive list of other affiliate services prime members can use - each one another reason to use prime, if you happen to use those services.
I’m actually surprised how cheap prime is considering its value.
Pretty sure it's some rule I added to ublock but I haven't spent the time figuring out which exactly. But seems it's still possible to block those ads.
With the addition of ads to their streaming service, I am out. They don’t offer enough to be worth it anymore.
Now if you have Discover or Chase Freedom, they run the 5% quarterly bonus (for the first $1500 spent on the bonus category) at least once a year, so your break even point is even more than what I mentioned earlier (closer to $10K).
Many large eBay sellers do this. For example, they may offer phone cases for £5 each and a screen cleaning kit for £1, all as different variants of the same listing, so that their listing appears alongside other £1 items in a search for phone cases. It is technically a violation of eBay's listing policy,[1] but is widespread as the rule is not enforced in practice.
1. https://www.ebay.co.uk/help/policies/listing-policies/search...
I believe the rise of "free" shipping had a lot to do with manufacturer minimum price fixing. Personally I'd prefer to have the shipping cost be explicit, but also be paying less per product. But something tells me if this narrative gains legs and retailers are able to claw back "free shipping", they won't be removing that margin from the individual products.
As for the article, the moralizing about being an "asshole" is completely unjustified. The big retailers are playing constant pricing games through dynamic pricing, sales, coupons, etc to extract as much money possible from people. I'm not going to feel guilty about following the rules they've created to save a few bucks by doing things like returning items that I preemptively ordered to take advantage of a sale, without thinking about whether I actually want them or not. They're hoping "free returns" will induce me to buy crap I don't want, I mitigate that by batching my buying sprees and putting the due date on my calendar. "What's right" has left the dynamic a long time ago.
This article talks about the fact that adding an additional shipping charge is painful after years of conditioning customers to expect that charge to be $0.
Yet it's not as if retailers have had to eat 100% of that cost in the absence of a separate line item on the order. Consumers are aware that shipping charges are often priced into the base cost of the items, especially from online-only retailers who don't need to maintain the illusion of having the same price in store and online.
Personally, I like the idea of baking the shipping cost into the price of the item. (I also like the idea of baking gratuities into the cost of restaurant meals.) And if a company then wants to offer some discount for quantity or loyalty or whatever, that's fine.
Since no manufacturer can risk having no Amazon sales, this means the manufacturer requires a base price that matches Amazon.
Amazon recoups free shipping cost through additional merchant markups.
This means consumers pay increased prices everywhere, and we are all indirectly paying the free shipping cost even if you walk into a store.
Even worse, the shoppers who are being thoughtful effectively subsidize the worst actors. My return rate for non-damaged goods is sub 1%, but I pay the “baked in” price of shipping for the average purchaser - the same rate as the person returning 99% of their orders.
You could make the argument that if you return items more often than the average customer, your share of those costs may be getting subsidized by the customers who return items less often. But if you return items less often, you're probably worse off.
I hear this “passing the cost on” argument all the time and it always presumes that the consumer is the only cost taker. It forgets that costs can also get passed to someone else: the shareholders, in the form of lower profits.
My household consistently sees Amazon ignoring our designated delivery day as well as using multiple drivers per day to deliver to us. The peak I noticed on the security camera was 6 drivers in one day. All the items were made with a single purchase.
That made me realize that pricing on Internet is now more proportionate to utility than cost to deliver. People in the market for a cap to cover an unsightly pipe in the backyard pays that price, especially under $15 or whatever relative tolerable multiple of local minimum wages.
I keep my costs to the bare minimum. I started it because I wanted decals no one else was making. I cannot justify feee shipping.
In the UK I eat the cost as it is about £1 to ship UK wide. Posting to the US is now around £7. I need to send tracked thanks to the selling platform.
It honestly pains me to have to charge shipping - but I could’t do it any other way. I can only imagine the costs that are associated with this for bigger outfits. Heck. Even Amazon has a logistics company now (but I suppose that’s where the Prime premium comes in!)
Usually the second option is more lucrative because it feels more attractive to customers, and if someone buys from a cheaper-to-ship location or buys multiple products you save more on shipping without passing the savings to the customer.
VCs and many others did the same in Uber, UberEats, scooters, etc.
Then they stopped when the Fed started raising rates, as they expected (correctly) that expectations were changing and revenue now mattered more than expected future trajectory.
It was an attempt at market dumping using investor cash in order to capture the market.
And it kinda worked. Taxi companies took a serious hit.
Now we’re seeing more realistic market prices, and investors are getting hit hard. Because they didn’t succeed at getting the monopoly they wanted.
That’s the larger picture, IMO.
Instead of shipping items to each individual customer, what if we instead built locations that were stocked with items that customers are likely to buy. Then you can ship things by the truckload to the location.
And here is the kicker, you can have the customer come in and select and pay for items they want. This avoids having to do the last mile shopping of individual items to the customer. In addition, the customer can often get (common) items even faster than even next day shipping.
What does everyone think? Does this idea have some possibility?
Edge computing seems to be starting to get big. Maybe we can call it edge retail?
In the USA, all sales taxes on your item added together are usually just a few percent. (Higher in expensive cities though)
The only thing that is not shown up on the shelf is the deposit for beer & soda/water bottles that some countries have (usually around €0.10-0.20 that you get back when you return the bottle).
As a consequence, the sales tax rules are extremely local and the combination of all separate tax authorities that have jurisdiction over a specific retail location. While it might be nice if the sales tax was built into the price, it is a continuously moving target and therefore is simpler to compute on demand rather than physically repricing things on the shelves.
Still, seems like the retailer is in a better position to handle that complexity than the consumer. Surely it's better to have the retailer advertise the post-tax price (and occasionally lose money if they wrote the price tag assuming one set of taxes, and determined a different one applied at checkout) than for the customer not to know whether the $30 item they are buying is $32 or $38. It's not even that important that the customer's receipt correctly itemizes the taxes - that's nice, but it matters more that the retailer pays the right amount to the tax collector at the end of the year.
Also, "thousands of overlapping sales tax authorities" overstates the complexity. A typical retail location (the level at which price tags are usually decided) deals with 0-3.
Any sales tax decrease will not be transferred to the customer except in a delayed fashion under your model. Furthermore, requiring the retailer to eat any downside on sales tax changes will cause average prices to increase, albeit slightly in most cases, to transfer the risk to the customer as happens in every other market where operating costs are not directly chargeable.
And don't forget, the whole Europe still can't solve that for the last 40 years!
Wait...
They did.
Now I listening for the list of excuses why this country can't do the thing the whole world did eons ago.
... much like a retail store, where their overheads (e.g. the rent of the store) are also built into the price.
I’ve seen 100 €, but also as low as 20€ and anything in between.
This article is simping hard for businesses formerly doing the absolute bare minimum to make online shopping viable so they can get out of their expensive storefront leases now just increasing prices without having to say they're increasing prices. The mental gymnastics required to say that the cost of shipping and returns which we've been paying the whole time is something we've been getting undeservedly for free is appalling.
> But in a larger sense, the pushback from retailers is a good thing. Free shipping is not actually free. It involves massive, expensive logistics operations and often leaves small retailers at an impossible disadvantage compared with their much larger competitors. The too-easy shipping and returning process consumers have come to expect is harmful to the environment.
Oh gag me, free shipping and returns isn't free because corporate daddy is so generous, it's not free because it's baked into the price and consumers have signaled a massive preference for $x+y with free shipping over $x item with $y shipping.
Also there's no way in any universe that the cost of getting an item to me physically via my car and a physical storefront is better for the environment than the Amazon or FedEx truck taking what would have been hundreds of trips to the store and making one run for everyone. I don't have a massively efficient logistics network.
> They are charging to send stuff back, shortening return deadlines, and refusing to accept some items entirely. Retailers want to dissuade consumers from making returns at all — or at least force them to do it in a more profitable manner, like physically bringing stuff back to stores.
Why even bother with the charade? You don't have to offer returns at all and consumers understand that some items are non-returnable like sale items. Well because they need to say they allow returns or else folks won't buy. So you just rug pull by making it difficult while technically saying you still allow returns.
Maybe not. But what about walking to the store? And certainly minimizing the number of trips those delivery drivers make by consolidating items instead of doing next-day by default certainly helps.
I think there's a lot of room for improvement here if we can make use of planning more. Consolidating deliveries, local production of goods, and better transportation infrastructure (for items and people)
A good store ought to have good staff who can just assess your needs and sell you the specific thing you’re looking at. It’s just that Amazon came about at a time when brick and mortar retail had already cut to the bone and downskilled their staff (through low compensation, overbearing management, no career growth, and high turnover) to the point where nobody even has expectations of a good retail experience, but countries (and income brackets) where boutiques haven’t been driven out by a ruthless price cutting fixation still have them.