NPR had a good story "There's Always A Cost Associated With Free Shipping". The story partly suggests that free shipping is ultimately of a gimmick or come-on--at the end of the day, there is no free lunch, total product cost is what matters. I agree, marketing theory says, find some product cost (or other attribute) that consumers over-value (or over-dislike), and play that up for an asymmetric benefit. "Free Shipping" fits that profile.
I have a few counter-arguments for this specific case, though. First, historically merchants have sometimes treated "shipping and handling" as a profit center. I.e., advertise a low price, and only once the consumer is deep into checkout, reveal an inflated S&H charge. It is form of bait-and-switch.
Second, even if merchants are playing fair, and treating shipping as only a pass-through cost, it can be hard for consumers to predict what the shipping cost will be. Resulting in added cognitive burden, and the risk of spending time shopping and going through checkout, only to get a big surprise at the end.
So free shipping takes both of the above issues off the table.
(There are significant environmental issues associated with free 2-day shipping, I thought this was a good summary. It would be nice if Amazon led the way by pushing the green angle on not taking free 2-day if you don't need it--they already offer some credits, which is a small start.)
I have a few counter-arguments for this specific case, though. First, historically merchants have sometimes treated "shipping and handling" as a profit center. I.e., advertise a low price, and only once the consumer is deep into checkout, reveal an inflated S&H charge. It is form of bait-and-switch.
Second, even if merchants are playing fair, and treating shipping as only a pass-through cost, it can be hard for consumers to predict what the shipping cost will be. Resulting in added cognitive burden, and the risk of spending time shopping and going through checkout, only to get a big surprise at the end.
So free shipping takes both of the above issues off the table.
(There are significant environmental issues associated with free 2-day shipping, I thought this was a good summary. It would be nice if Amazon led the way by pushing the green angle on not taking free 2-day if you don't need it--they already offer some credits, which is a small start.)
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