Free Shipping Worth More Than A Bigger Discount

from the more-powerful-than-you-might-think dept

For years, there have been controversies (especially among financial types) over whether or not e-commerce shops should offer free shipping, especially as some fear that it takes too big a bite out of the bottom line. However, there’s more to free shipping than just the saved money. Researchers are finally starting to look at the psychological draw of free shipping deals. It turns out that people are much happier with free shipping deals than if they just got a discount. There’s just something about getting free shipping that feels right — which could explain why some people get upset when they feel the free shipping is really a bait and switch offer. This points at an issue that isn’t really covered in the original article. One of the reasons why people like free shipping so much is that they don’t feel tricked at the end of a purchase. Too often, online retailers hide excessive shipping and handling fees and only make them show up at the end. This makes people feel tricked. They were promised one price, but really given another. Offering free shipping makes people feel comfortable that the price they see is actually what they’ll pay — and that comfort level seems to have a clear value to customers. Among retailers, Amazon has clearly realized this. Not only have they resisted pressure from investors to ditch their free shipping policies (on certain orders), but they even came up with a system to get people to pay a flat annual fee to guarantee “free” express shipping. What Amazon realized is that “free” shipping isn’t just about not paying as much money (as odd as that sounds), but about the comfort level of customers.


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Comments on “Free Shipping Worth More Than A Bigger Discount”

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39 Comments
Louis says:

Office adds on the right.

I find those MSOffice adds with the Dinosaur heads offensive, Dialogue *should* actually go

Green Dinosaur head: “So are you still looking for that attachment?”

Yellow Dinosaur head: *sound of someone choking on his own tongue*

“I see. What application are you using?”

“Office XP”

“Apparently we have to upgrade again.”

“When do you think the boss will allow us to remove these stupid Dino masks?”

JPerks says:

Bargain Shopping

The contributor hit it right on the head. I like to know what I am paying for and not have to pay $25 for shipping of an SD card when I can run down to Circuit City and pick up one for about the same price as the online cost plus shipping.

I use the internet for nearly all of my purchases for the purpose of money saving and more selection.

When I find the product for a few bucks cheaper I don’t want it to end up being more expensive after shipping charges are applied.

I would take free shipping over a minimal discount any day of the week.

Peet McKimmie (profile) says:

Free's fine, but I'd settle for clearly priced shi

I live in Scotland, and I’m sick of going all the way through a US website, jumping through hoops to register and verify my email address etc. only to be told at the last second that the shipping on my $5, 3oz product is a non-negotiable $50 because I’m outside their “comfort zone”. It’s almost as irritating as sites that claim to accept internationl orders but won’t let me proceed without entering a “State”.

Trishinomaha says:

I totallly agree with the free shipping thing. I also do a lot of shopping on line. Sometimes sellers on E-bay try to make up for “bargain” prices by tacking on outrageous shipping and handling. I got stuck with this only once. Can you believe 99 cent pair of shoes with a $20 shipping charge! I always check shipping charges now but it was an expensive lesson! Just bought a new monitor from compusa and one of the draws for it was free shipping AND a rebate…

Sysadmn (profile) says:

Amazon...

Actually, the other brilliant thing Amazon did was invent a tier of shipping BELOW “standard”. By holding an order 1-2 days, then using the usual 1-3 day shippers, they can charge MORE for shipping in 1-3 days! Suddenly, other vendors “standard” 1-3 day shipping becomes Amazon’s “express” shipping. And the free shipping on orders over $25 doesn’t apply to “partner” purchases – which is becoming more and more of the non-books & music on the site.

R-Bro says:

I'll do this one better...

I agree… I *love* seeing the words “free shipping,” even if the price of the product is higher than it is elsewhere. In fact, it drives me nuts having to pay $3.50 or whatever for a CD when it obviously costs only a buck to ship. Charge me more for the CD and give me a reasonable shipping rate. I know it’s nuts, but it makes me happier.

By the same token, I’d rather pay $200 for a TiVo box and zero for the lifetime subscription fee than get the box free and have to pony up for the subscription. Doesn’t make sense, I know, but to me it’s a perceived value thing.

dataguy says:

“This makes people feel tricked. They were promised one price, but really given another.”

Went to order a pre-paid phone from T-Mobile, for my daughter, the other day. The price was displayed as $50 but once I put it in my shopping cart the price suddenly became $80. This is well before the shipping charges are added.

There was no explaination that I could find. I checked all over the site. I can only guess that the cost of the included pre-paid minutes was added on.

So since I was feelling tricked the result is the sale will go to the brick and morter store (maybe) and not the on-line store where their over head costs/sale should be lower.

tmcounselor (user link) says:

Mobile Madness

re: “So since I was feelling tricked the result is the sale will go to the brick and morter store (maybe) and not the on-line store where their over head costs/sale should be lower.”

Speaking of ordering mobile phones online. Last January, I ordered a “free” Nokia 6102 phone with “free shipping” from Cingular Wireless’ website. Thinking that shopping online would be a win-win proposition for me (I don’t have to brave the mall crowds and traffic) and Cingular (lower overhead), I opted to wait a few days for the phone. Having owned several Nokia phones in the past, I was surprised the one delivered was defective. Thinking that the 30 day return policy was a good deal, I called Cingular to make arrangements to return it. No problem with taking it back, but I just had to wait “5-7 business days” to receive a return mailer. Now why can’t they just send me an email with that information? Cingular’s sales rep could not answer. 1 month later I received the “mailer” (just a bar coded form with no pre-paid envelope) and PAID $15 to send it back. Suffice to say, I would rather brave the crowds and traffic of a brick and mortar store, which I did. Got a great new SDA smartphone from T-Mobile. Good by Cingular!

Anonymous Coward says:

Re: Mobile Madness

your gonna get this with any company that alows you to return a defective product. if you have to return the product, your gonna pay for the return shipping. its not Cingulars fault, its the company you used to ship it back with (weather its postal or shipping).

Iv had to deal with returning products for a while (as a system builder, theres a lot of dead products). iv always had to cut the cost of returns, but its a lot better then getting a product with no warrenty, (you cut the price for the replacment, and shiping both ways!)

i use cingular, and am very happy with the service, when i orderd my phones an plans online, and the price i was told, was the that i paid, in fact, when i got the phones in the mail, they charge on the paper statment was less than the online. i checked my online bankstatment, and found that they infact charged less then they said originally.

haywood says:

I am a constant “free shipping site” customer. I do this because of the time it takes to find out the bottom line on the other sites. Often, you have to give them your contact info and even set up an account before the shipping is revealed, so, if I can find it on a free shipping or even obvious shipping charge site, I will just buy it there, if it is within my comfort zone for the cost of the item. I can usually justify the purchase due to sidestepping sales tax @ .0875 on a local purchase. That and the fact that local merchants lack the selection I get on the web.

Neal says:

Just this week

I always look for free shiping for just the reasons listed and I’m always disgusted when I have to buy somewhere that doesn’t offer it and I see over the norm prices added on in the cart.

Amazon is cutting pennies another way though… my jaw dropped as I saw it with a shipment this week. Normally they are shipped from Lexington, Ky and arrive in Owensboro, Ky in 3-5 days from order via a ground carrier.

This last order listed > 2 weeks as shipping time, and I’ve watched as it left Lexington Ky via DHL four days after order, went to Ohio, then to Evansville Indiana where they dropped it off at the US Postal Service. My guess now is that I’m waiting for a media mail package that could take anywhere from days to weeks to travel that last 35 miles….depending on the USPS.

Amazon could’ve spent another 50 cents to a dollar (on this $200 purchase) and shipped this package UPS or Fedex ground and made my purchase experience more enjoyable. Would’ve make good business sense since I’ve got over $1000 of books in my wish list.

DerOoestericher says:

sales tax sales

A local hardware store is having a ‘We Pay the Sales Tax’ sale this weekend. Some people in the office are excited about it.

If they were advertising a 10% off sale, I doubt there would be as much excitement.

If the ‘hidden charges’ don’t become an added line item later, people will pay them without complaint.

chpsk8 says:

Always add in your shipping before buying...

As with any cost benefit analysis you need to be aware of all fees before hitting the send button. I try and compare a local store to the internet all the time.

The benefit of web shopping is that most of the time you don’t pay sales tax. You also don’t put gas in your car to go to the store. And there there’s the convenience factor of click and ship. Thats worth something.

I was duped last year on Ebay buying a SD card. Actually, I knew up front that the card was $5 and the shipping was $15. But for that $15 the guy put the card in an envelope and stuck two stamps on it! I got it TWO WEEKS later! If you’re going to pull that kind of crap at least ship it Priority, it’s not that expensive!

I recently bought some car detailing supplies online. I really wanted to support one site, but after comparing thier shipping costs to a competitor I had to go with the competitor. The difference was significant. Too bad really, but I cant’ let that kind of money walk away.

Free shipping is ok, but you still need to compare the end result. Free shipping is meaningless if you are paying more than a competitor. You need to compare all the factors before making a decision, and not get lured in by the “free shipping”. Nothing… is free. Its’ all added into the price fo the goods.

haywood says:

Re: EBAY

The inflated shipping costs on ebay are forgivable and understandable, the auction pricing schedule is the culprit. If I sell you a widget for $1 and charge $10 shipping, I get charged commission on a $1 sale. If I sell you a $10 item and charge $1 shipping I get dinged for commission on a $10 sale. That is why it is so upside down.

Ajax 4Hire (profile) says:

Re: Re: EBAY; no one believes your cost for handli

Shipping cost is easy to discover, it is usually listed as postage on the package/envelope.

Ebayers are brutal when it comes to ‘S&H’.

No one believes it cost $14 to ‘handle’ that CD mailed for $0.99 Media rate.

Irritating and shell games on final purchase prices will make you money in the short run, but you will go out of business in the long run.

Nate says:

Re: Re: EBAY

Re: EBAY by haywood on Apr 21st, 2006 @ 9:33am

The inflated shipping costs on ebay are forgivable and understandable, the auction pricing schedule is the culprit.

They are not forgivable nor understandable. If you are selling something for a price, then that is the price. If I’m paying $15 shipping for a 1oz item, that thing had better be shipping Express Mail Overnight. If it arrives in a Priority Mail package with the $3.85 stamp on it, I stop payment on the credit card. I have won every one of those contestations using the documentation provided in the sale closing.

haywood says:

Re: Re: Re: EBAY

You’re just being a hard ass on something that evolved in its own way to where we find it today. The shipping charges are normally visible, and when they are not, DON”T BID. It isn’t like someone is running a scam. What you profess is like going to a foreign country and trying to force your version of how something should be done on the locals.

Chris says:

Dropped carts

I’m always buying off the internet. But it is such a pain when you don’t know the full cost until you have been through 99% of the ordering process. Recently i had three tabs open, including all my credit card and delivery details, just so I could see the bottom line… what’s it really going to cost? And people in e-commerce wonder why people don’t complete the sale! The people I usually use got the business because their shipping costs were the most reasonable – even though the up front cost was a little higher.

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