Free Shipping Worth More Than A Bigger Discount

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

Fri, Apr 21st 2006 2:52am — Mike Masnick

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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39 Comments

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Louis, 21 Apr 2006 @ 3:47am

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?"
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Jake, 21 Apr 2006 @ 4:17am

It Makes Sense
Since a lot of the idea behind online shopping is comfort to begin with (buying in the comfort of your own home), it makes sense to continue and play upon that feeling.
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JPerks, 21 Apr 2006 @ 4:28am

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.
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Peet McKimmie (profile), 21 Apr 2006 @ 5:06am

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".
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Trishinomaha, 21 Apr 2006 @ 5:07am

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...
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vmd, 21 Apr 2006 @ 5:19am

Re: It Makes Sense
Absolutely. Even though I don't buy a lot, I would prefer places that offer "2nd day free shipping" like ZipZoomFly over other retailers even if they come up with a discount of a greater value.
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Sysadmn, 21 Apr 2006 @ 5:20am

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.
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R-Bro, 21 Apr 2006 @ 5:23am

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.
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Galley, 21 Apr 2006 @ 5:39am

Super Saver
It would be different if Amazon's free Super Saver shipping took two weeks like they predict, but I often receive my item in five days.
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Jacobi, 21 Apr 2006 @ 6:03am

Another smart thing Amazon did was make free shipping an option only after you've bought $25 worth of stuff. So I NEVER just buy one book as I always bump up my order to make it qualify for free shipping. So I'm buying stuff I otherwise wouldn't have in order to not "waste" the $4 dollars shipping would have cost me.
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dataguy, 21 Apr 2006 @ 6:08am

"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.
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zachary pond, 21 Apr 2006 @ 6:39am

one of these days i'm going to ship myself somewhere nice.
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tmcounselor, 21 Apr 2006 @ 6:45am

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!
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haywood, 21 Apr 2006 @ 6:51am

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.
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Neal, 21 Apr 2006 @ 7:06am

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.
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brodle, 21 Apr 2006 @ 7:34am

Re: Bargain Shopping
I honestly think that most online retailer that have a more dominate store front want to have high shipping cost. They want you to get in your car and go and buy it in the store. It is cheaper for them and their website just becomes a huge advertisement.
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DerOoestericher, 21 Apr 2006 @ 8:02am

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.
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zachary pond, 21 Apr 2006 @ 8:05am

the only thing better than free shipping is free pie and chips!
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Anonymous Coward, 21 Apr 2006 @ 8:50am

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.
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chpsk8, 21 Apr 2006 @ 8:59am

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.
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Tim, 21 Apr 2006 @ 9:11am

Ebay sellers are the worst for this shipping charge crap. Compare like items and you will see.
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Chris, 21 Apr 2006 @ 9:14am

Another advantage of free or low-cost shipping is that on returns you don't get the cost of shipping refunded. Therefore I will always buy from the store that sells for $110 with free shipping rather than from the store that charges $100 plus $10 shipping.
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Chris, 21 Apr 2006 @ 9:18am

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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haywood, 21 Apr 2006 @ 9:33am

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.
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Ajax 4Hire, 21 Apr 2006 @ 9:53am

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.
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Rich Miranda, 21 Apr 2006 @ 10:29am

...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.
Yeah, so what about the sellers on eBay who do that but have feedback of 75,000?
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Shruti, 21 Apr 2006 @ 10:34am

Ebay
The reason people jack up shipping prices on Ebay is because Ebay can't take commission on shipping charges, just on the actual price of the product. That's why you have shoes costing 99 cents with 20 dollar shipping charges
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belg4mit, 21 Apr 2006 @ 10:41am

Feel good
I should think part of the reason shipping and handling feels good as it may come closer to the instant gratification of brick and mortar shopping. Even if free shipping is one of the slower options (5-7 days usually) the fact that you're not paying for it doesn't rub the delayed gratification aspect in your face (or wallet).
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Nate, 21 Apr 2006 @ 10:57am

Re:
The eBay thing of putting a shipping charge of $20 on a $1 item would stop if eBay would charge the seller for total price of purchase including all shipping. There would be no incentive for the shipping charge anymore.
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Nate, 21 Apr 2006 @ 11:03am

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.
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haywood, 21 Apr 2006 @ 11:37am

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.
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Beck, 21 Apr 2006 @ 12:05pm

Re: Re: Re: EBAY
Nate,

When you stop that charge on your credit card I hope you send the item back to the seller.
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satan, 21 Apr 2006 @ 4:04pm

Re: Free's fine, but I'd settle for clearly priced
good point
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Paul, 22 Apr 2006 @ 1:01am

Already there!
Actually, this is already happening for me. I always use play.com for books, dvds, cds, etc. The reason? Free shipping. I never use Amazon because I usually have to pay more even with discounts.
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dawn alfonso, 24 Apr 2006 @ 11:04am

l like cheap prices and free shipping,
that does sound wonderful, for free shipping, dawn
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Masey McMashion, 6 Aug 2006 @ 8:57am

..........THIS IS STUID
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Masey McMashion, 6 Aug 2006 @ 9:01am

..........THIS IS STUID
Im Sorry! But You Should Have Video Games On This!
Why? Because Everyone Would Want To Buy It Off Of This Website! I Mean Great Name! Great Main Page! But Sell Stuff! But Better Prices Than All Those Other Stores! And Free Shipping And Handling! -
Thank You Very Much!-
Masey McMashion
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