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Is Free Shipping really free?

Online retailers often advertise free shipping.. but FedEx, UPS or the post office are not delivering your goods free of charge, someone is paying them and that is you at the end of the line! For the first example lets look at a purchase of dress shoes. It is not time sensitive, it can take a week or two to get to where it needs to be and it’s still shoes. Places like the large fashion retailers have warehouses around the country and the shoes are shipped from the closest warehouse and the least expensive way possible. In this case the shipping may actually be minimum, it will not eat into seller’s profit.

Next lets look at a clothing purchase, some jeans, a few t-shirts… again it is not time sensitive, it’s shipped by the least expensive method possible and the shipping was probably less that you would have gotten last year with a discount coupon. So basically shipping things by slow ground methods are pretty inexpensive but it’s not for time sensitive items. Perishable items need to be shipped so they arrive before they melt or go bad and that pretty much rules out the really cheap shipping. You could guess what a shipment of New England Lobster would look like if it took a week to arrive.

How can any merchant give you “free” shipping? Answer: They don’t. What they do is reduce service or pass on costs in some other way 

All the ‘free shipping’ offers have created the impression that all shipping should be free, but when you are comparing ground (slow) and express(overnight) the shipping is not in the same class. When you ship a package using an overnight service it is sent by express air carrier and that is not cheap. In an age when the airlines are charging $50 to check luggage, the un-discounted rate for sending a package cross country is about the same. If you ship a lot of packages (like we do) you get a discount from the base rates, but past a certain point there are no more discounts from the carriers. At the end of the day they need to make a buck!

Everybody has heard the phrase “there is no such thing as a free lunch”, and in the case of overnight shipping and perishable products it’s true. In the perishables industry the various companies are “simulating” free shipping in one of three ways:international moving service

  1. Build the cost of shipping into the prices, when the cost of the price has been raised to cover the cost of the shipping the shipping is then ‘free’. You actually don’t save any money this way, it may even cost you more because now that the product cost includes the shipping you may end up paying tax on the price including shipping. Buy a watch for $70 with free shipping is worst than buying a watch for $40 and paying $10 to ship it. You will be paying taxes on $70 purchase Vs $40.00
  2. Cut the cost of the product, packaging and the shipping cost by using a 2 day service rather than an overnight one. Cheaper ingredients and shipping so that it arrives later gives the product a extremely short shelf life and no ‘cushion’  in case of carrier or weather delays.
  3. Making a minimum purchase or limited item free shipping, the ads say ‘free shipping’ but it’s on limited items, those items may only be shipping by the less expensive methods or already have the cost of the shipping built in. Amazon recently increased the minimum to $35 purchase to qualify for free ground shipping.

When shipping New England Lobsters for example,  you need to protect the product from heat and keep them chilled to keep them fresh. Some companies are leaving out the gel pack and shipping the lobsters using a 2 day service. Leaving out the gel pack reduces the shipping cost in two ways, the weight is less and the box is smaller causing the dimensional weight to be low. Without a gel pack to keep the box chilled the lobster will arrive dead.

Our Conclusion

The word FREE usually means you’ll be getting something for nothing, but is that the case here?  Based on my years experience, most of the time the answer is NO. So you  can see that ‘free shipping’ really’ is not free someone always pays the UPS, FedEx, or Post Office bill.

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