I've come across quite a few articles that point out downsides of "free shipping", here is a recent one. One downside is environmental impact--free shipping leads to less efficient ordering (smaller quantities, not bothering to bundle shipments). Free expedited shipping makes this even worse.
Another downside is that it contributes to winner-take-all economics. Amazon can do free shipping much more efficiently than a small eTailer.
IMO, part of the reason "free shipping" has become such a draw lies in the alternative, especially as practiced in the earlier days of eCommerce. Problem #1 is eTailers using shipping as a profit center. So advertising low prices, but then doubling the real shipping cost (in the pre-internet days, this was often referred to as "shipping & handling").
Problem #2 is just the mental model of not knowing how much shipping will cost. It is very tedious and frustrating eCommerce experience to select and configure a few items, perhaps go through a few screens of checkout, only to have the website calculate the shipping at the last minute and see that it will be 40% of your purchase price, causing you to abandon.
So the first problem is a business-model problem. No sympathy on that. Give me straightforward pricing every time, spare me loss-leaders, coupons and cross-subsidies.
The second problem is where Amazon probably has a really huge advantage. The easy solution to post net prices that include shipping, and also factor these into search (show net cost, shipping included). This is what Amazon typically does.
Amazon makes it look effortless, but I imagine there are major complications. First, you have to know the destination address, so it helps if the shopper is already logged in--advantage Amazon. Second are the algorithms. E.g., how much you get charged for shipping would typically include how many other items you purchase. I imagine Amazon uses algorithms to come up with a single, flat number. Sometimes too high (multiple items same shipment), sometimes too low (multiple single items). But it all evens out. That would be very challenging for any small eTalier to implement.
Hopefully over time, enabling platforms, such as Shopify, will emerge to help equalize some of these things. But it may be a very long journey, particularly for specialty eTailers. I.e., the pattern for one specialized product may be very different than another specialized product or a more general-purpose eTailer. It could take a very long time for Shopify, et. al., to get enough data to make correlations.
Another downside is that it contributes to winner-take-all economics. Amazon can do free shipping much more efficiently than a small eTailer.
IMO, part of the reason "free shipping" has become such a draw lies in the alternative, especially as practiced in the earlier days of eCommerce. Problem #1 is eTailers using shipping as a profit center. So advertising low prices, but then doubling the real shipping cost (in the pre-internet days, this was often referred to as "shipping & handling").
Problem #2 is just the mental model of not knowing how much shipping will cost. It is very tedious and frustrating eCommerce experience to select and configure a few items, perhaps go through a few screens of checkout, only to have the website calculate the shipping at the last minute and see that it will be 40% of your purchase price, causing you to abandon.
So the first problem is a business-model problem. No sympathy on that. Give me straightforward pricing every time, spare me loss-leaders, coupons and cross-subsidies.
The second problem is where Amazon probably has a really huge advantage. The easy solution to post net prices that include shipping, and also factor these into search (show net cost, shipping included). This is what Amazon typically does.
Amazon makes it look effortless, but I imagine there are major complications. First, you have to know the destination address, so it helps if the shopper is already logged in--advantage Amazon. Second are the algorithms. E.g., how much you get charged for shipping would typically include how many other items you purchase. I imagine Amazon uses algorithms to come up with a single, flat number. Sometimes too high (multiple items same shipment), sometimes too low (multiple single items). But it all evens out. That would be very challenging for any small eTalier to implement.
Hopefully over time, enabling platforms, such as Shopify, will emerge to help equalize some of these things. But it may be a very long journey, particularly for specialty eTailers. I.e., the pattern for one specialized product may be very different than another specialized product or a more general-purpose eTailer. It could take a very long time for Shopify, et. al., to get enough data to make correlations.
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