Free shipping isn’t really free (2020)
theatlantic.com
theatlantic.com
But clearly if I'm buying from an online shop I need shipping. And for a $5 item, shipping of $3 and shipping of $25 lead to very different purchase decisions.
/s (mostly)
I kind of felt guilty, because I genuinely wasn't trying to game anything.
For example, I've got zero qualms about buying something I merely might want because it's a on a good sale, and then making the actual decision over the next 30/90 days. And if I've already got a pending return somewhere, then doubling down with more speculative buying is essentially free. Holiday shopping season is basically an extended project season.
Or when items arrive damaged, I'll optimize the presentation of my complaints such that I'm less likely to have to actually return them to get replacements. This saves me the time of doing so and makes up for having to deal with the situation in the first place.
Baking free shipping into the price of every individual SKU most likely means that a retailer will either set a price higher than Amazon or earn negative profit on many orders. In both scenarios, the long-term consequence leads to far fewer small or independent retailers and your only remaining choice being Amazon and perhaps a few other megacorps.
I don't want that. I don't pay for prime and I don't pay for shipping, I'll wait for weeks or longer until I need however many items it takes to reach the slower free shipping threshold. I don't want my option to save that money to go away.
Note that this is RAMPANT on eBay these days.
I remember some online store forum bragging about how much extra money you make with it. This was circa 1999-2001 era online shopping.
Free shipping means the price is the price you pay. It's a lot more transparent.
However, I can see how major retailers get to negotiate superior relationships with Fedex and UPS and USMail.
Even for a small business, opening an account will get you double digit percentage discounts on retail shipping rates.
Let's say I sell shirts for $5 and offer free shipping with a $25 minimum. The shirts would be $4 if I charged for shipping. Shipping 5 shirts will cost me $5 and shipping 40 shirts will cost me $10. If someone buys 5 shirts, $1/shirt goes to shipping and I get $20 after shipping - just like $4 shirts plus $5 shipping. If someone buys 20 shirts, $0.50/shirt goes to shipping - I'm making an additional $0.50/shirt because someone decided to make a larger order.
But this is why a lot of stores do coupons when you hit thresholds. Free shipping at $25, 10% off if you spend $100. That way if you spend $100, you're actually charged $90 and so you're only paying $4/shirt + $10 shipping.
> Tell me ONE price — inclusive of everything — up front
Do coupons that require you to hit a spending level fit into this metric? I think they do in a lot of ways. You see the price and if you just want the price you just get the price while large orders get the discount. But it can also be hard when you see a bulk discount and feel pressured to spend more.
It’s the same reason I will always toggle the “include fees” on Airbnb’s search interface. Just tell me the real price.
Upfront pricing and an assumption I’ll get the item in 1-3 days is the real value prop, and I’m still a happy customer of that product
Hard problem, though. I can ship to locals, which is the vast majority of my customer base, for practically free. But occasionally I get a far-away order where shipping is tremendously expensive.
If the price is inclusive, all my local customers have to pay substantially more just to cover the occasional order from far away. That's a lot for them to burden, and likely they'll stop buying. Nobody will pay an infinite amount for something. Alternatively, I could cut off sales to those in far away places, but that doesn't help me or them. They are buying from me because they want my product.
The obvious solution is simply to let those in far away places who still want to buy the product to pay a shipping fee on top commensurable with the added costs of getting the product to them.
Perhaps because for a higher price the customer expects a better product. (Nobody complains when the $1 scissors don't cut great, but the $15 scissors really ought to cut properly)
Umm, when I go to the Home Depot warehouse, they don't add something onto my receipt for "warehouse real-estate cost" or "warehouse heating charge." In fact I'd get annoyed if they did add such a charge. Furthermore, it's often publications like this one that whine when vendors like Comcast add in "regulatory recovery fee" or "regional sports fee" and the retort is "that's just a cost of doing business, they shouldn't be charging a fee for it, that's a junk fee."
But for some dumb reason when a retailer decides to bake the cost of shipping into the sticker price, that's not some pro-consumer thing but rather merits a cynical "free shipping isn't really free" and complaints that the retailer is "hiding" something.
So it is better to combine purchases, but that’s not the case if you have Prime (Amazon tries to bribe you to do so).
Do they? I can't recall Amazon offering me anything other than a longer wait time (for the items that can be shipped faster) and fewer boxes.
Maybe in denser areas it’s not worth it to them.
As always, though, there are different norms among industries. We don’t think anything is off when we see “Free Shipping” notices online, but if the same practice were elsewhere we’d think it were bizarre. To wit:
Restaurants: Free Dressing with Any Salad
Coffee Shop: Free To-Go Cups
Cities/Municipalities: Free Schools and Snow Plowing
Auto Mechanic: Free Windshield Washer Fluid
Notebook Computers: Free Charging Cord
Credit, though, to coffee shops which do provide a discount if you bring your own mug. Plenty of other businesses could do this and offset the built-in shipping charges they have online. For instance, a shoe retailer may have the same price online (with free shipping) as their local store, but I’ve never seen a setup like this whereby the customer gets a discount for picking up locally.