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The idea that shoppers are getting shipping for free when they receive "free shipping" is a bit of a tall tale on both the retailer and consumer side. This art
by jawns 3y ago
The idea that shoppers are getting shipping for free when they receive "free shipping" is a bit of a tall tale on both the retailer and consumer side.
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.
- lukevp 3y agoI don’t think this is true, at least in electronics. The price in store at competitors is the same as the price on Amazon but with free shipping… I see it more like the shipping costs are similar or less than the overhead of having a brick and mortar store, so it works out anyway.
- KallDrexx 3y agoIf you believe the FTC in their current active anti trust case, the reason for this is that if Amazon sees your product for cheaper elsewhere (even if it's the same after shipping), they will down rank your product in search results and add friction to the buying process. 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.
- yojo 3y agoPer the article, “free” shipping (and returns) incentivizes inefficient behavior. Instead of grouping your purchases and avoiding speculative purchases, you just buy anything you think you might like, whenever you think of it, and inefficiently ship things one at a time. 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.
- tedivm 3y agoDid the article really prove that though? The reason these extreme cases get so much press is because they're outliers, not because they're the normal thing everyone does.
- yojo 3y agoI don’t know that it proved anything, but it did say the average return rate for 2022 was 16.5%, which is at least an order of magnitude higher than mine and a pretty large inefficiency.
- CWuestefeld 3y agoI think there's an objective reason for the buyer to prefer that the shipping cost be baked-in. In the case of a problem with the product, such that I get a refund, I'll be getting back the cost of the shipping as well. If the cost were separate, then I'd have to eat that loss.
- masfuerte 3y agoIn the UK and Europe you are entitled to be reimbursed for the shipping if there's a problem with the product. In my experience, they won't volunteer it so you need to ask.
- graphe 3y agoI bought a $10 item with $10 shipping on eBay; it was broken. Offered a refund of the product, not the shipping and I'd have to eat shipping. All that for basically $5. Always get free shipping!
- sicromoft 3y agoThere's no such thing as a free lunch, regardless of how you distribute the costs. If a seller is refunding the cost of shipping on returns, they are passing that cost on to you in some other way (higher prices, membership fees, etc). 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.
- massysett 3y agoNo, in a competitive market they are not necessarily “passing that cost on.” For instance, an online retailer must compete with bricks-and-mortar stores. At local stores, all shipping and returns are free. If online retailer’s price is too high, it might simply lose the sale. Its price, including shipping, must compete with the price at the store. 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.
- oytis 3y agoKeeping shipping costs separate incentivises aggregating multiple items for more efficient shipping though (and for buying things you don't really need of course).
- CrankyUser92 3y agoRecently bought 86 Ethernet cables from Monoprice. There with 55 tracking numbers. 54 envelopes with one cable each and the rest in one box. All of them seemingly came from the same place. 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.