Let’s Get Real Consumers! There is NO Such Thing as Free Shipping!

by Lisa Suttora on March 25, 2011

News out today that L.L. Bean and Zappos are leading a new “free shipping revolution”…

Steve Fuller, the chief marketing officer at L.L. Bean, said his company came to the decision after examining “research after research after research” showing shoppers prefer to not pay for shipping.

Last week, eBay announced an increased push to drive sellers to offer Free Shipping on everything.  “Buyers have told us they want free shipping.”

Here we go again. Of course consumers are going to say they prefer free shipping. Haven’t we all wished at some point that we could get something for nothing?

But the reality of “free shipping”  is this – There is NO such thing as FREE Shipping.

USPS, FEDEx & UPS still have  rate charts last I checked.  They are not offering free shipping.

The Realities of “Free Shipping”

1. There is no such thing as “Free Shipping” UNLESS the company is truly paying the cost of shipping out of their pocket.

2. UPS/USPS/FEDEX do not ship for free.  There is a cost, a very expensive cost, to ship goods from point A (online merchant) to point B (consumer).

3. Unless the merchant is paying for shipping COMPLETELY out of pocket (which will soon drive them out of business) they are raising the price of the item to cover their shipping costs.  Are we as consumers that gullible to believe that companies are “gifting” us with free shipping?

4. In some cases a company will subsidize free shipping with some other source of revenue .  Amazon charges for their Prime Program.

5. Big companies like Amazon or Zappos get deeply discounted shipping rates from the carriers. Smaller merchants do not enjoy those rates. Big companies are better positioned to offer Free Shipping and mark up their products with a smaller increase.

6. Smaller online merchants don’t get the big shipping discounts and “free shipping” often takes a bigger bite out of their bottom line.  While this model does work for some of their products, it does not work as a model across the board. If small merchants are forced to offer free shipping as part of this “free-shipping revolution” they will end up working on thinner margins to remain competitive.

Mr. and Ms. Consumer… Is this really what we want to  happen to our small independent online retailers?

Excessive Shipping Charges are Wrong

I wholeheartedly agree that companies who charge excessive shipping are wrong.

But the flip side of this is that more and more American consumers want to get something for nothing.

We want great selection AND dedicated customer service AND we want the best price AND we want free shipping AND we wanted delivered now.

Ok – Economics 101 broken down in plain English.  Stuff costs money. You need to make money in order to have something to spend.

If one group of people is getting stuff for free that they should be paying for, then somewhere, another group of people are not getting paid what they should be.

Small business is the fiber of this economy.  We need to look at this picture holistically for the sake of our economy.

And I blame BOTH the consumer and the big online retailers for perpetuating this “free shipping” myth.

Stores want to make sales. Consumers want to save money. Fair enough.  But within reason.

But this “me, me, me” “How can I get everything for dirt cheap at all costs?’ is driving our country and our economy into the ground.   Do you really need 43 pairs of shoes from Zappos, just because they offer low prices and free shipping?”

Now I suppose some of you are thinking “Well, Lisa have you ever taken advantage of a free shipping offer?  Yes, I have.  But it is not the driving factor in my decision to buy online. And no, I don’t have a boatload of money stashed somewhere to fund copious amounts of online shopping.  :)

In fact, I’m one of those people who, when shopping at a local store and receiving great help from a salesperson with my potential purchase will buy from that store.  If they’ve provided a service to me, I won’t steal their service and go online to get it cheaper and save a few bucks.

It’s not that I’m rich. It’s that I’m not short sighted. Because I know that my local enconomy needs that local store.  And if they are providing value, I want to support them.  Even if it means that I pay a little more out of my pocket.

Which brings me back to the free shipping revolution.

Let’s get back to the model of “a product sold and delivered at a fair price”.

Yes people’s budgets are squeezed.  But the answer is not in driving American owned online businesses out of business, by demanding an ecommerce model that is not sustainable for millions of sellers. How does that benefit us as consumers in the long run?

From the early days of mail order catalogs, Free Shipping was designed to be used as a PROMOTION not as a standard price model.

  • It costs money to get in the car and drive to the mall and buy a pair of shoes.
  • It costs money for an online retailer to ship a pair of shoes.
  • Gas is expensive.
  • It costs more money to fill your tank.
  • Carriers are charging retailer fuel surcharges.
  • Shipping is NOT free

Ecommerce is one of the strongest growth industries in our country.  Let’s not ruin the model because we want something for free that is not free.

I’m all for free shipping promotions. They are a great way to excite your customers, give them something special and generate more sales.

But when Free Shipping (which BTW is the #1 preferred online PROMOTION) becomes the norm, then what do etailers offer as a promotion?

With the free shipping promotion gone and stores already running sales to attract more buyers… what more is there to offer as a buying incentive?  There is no MARGIN left to offer incentives.

And ultimately, I think what consumers really want at the end of the day is a fair price for a good product delivered for a reasonable amount.

-Lisa

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