X

Sorry, but There's No Such Thing as 'Free Shipping'

Retailers just hide the costs, and we consumers fall for it
By Newser Editors,  Newser Staff
Posted Dec 23, 2019 2:12 PM CST
A UPS man delivers a package to a residence in North Andover, Mass.   (AP Photo/Elise Amendola)

(Newser) – Pay for shipping? It's become a huge pet peeve for online shoppers, and big retailers have become expert at hiding the true costs, writes Amanda Mull at the Atlantic. Small retailers—think individual artisans on Etsy, for example, who have to schlep their own boxes to the post office—don't have the same luxury. It's a reminder that "shipping isn’t free for the people who send packages, and an insatiable demand for this perk might be the thing that breaks mom-and-pop retail for good," writes Mull. Amazon, of course, offers "free" shipping for Prime members, who seem to conveniently forget that they pay $119 a year for the perk. "The trick Amazon pulled off was to divorce shipping costs almost entirely from individual buying behavior" with that annual fee.

Mull's piece looks at consumer psychology, noting that shoppers today would rather make more purchases to reach a minimum free-shipping threshold than to pay shipping on just one item. "The reaction to free shipping goes beyond the normal way of looking at cost and benefit," says Ravi Dhar of Yale’s Center for Customer Insights. "A 20% discount, which would add up to the same $5 or $8 that shipping costs—that’s not as effective as giving free shipping." Larger retailers have "economies of scale" on their side to absorb shipping costs, but smaller ones are out of luck. Etsy recently changed its algorithm to give more preference to sellers who offer free shipping, and Mull's piece focuses on one woman whose earrings sales plunged 40% as a result. Read the full story. (Read more free shipping stories.)

My Take on This Story
Show results  |  
14%
40%
17%
14%
3%
12%