Comments on: The Prizes and Perils of Free Shipping

By: Kevin Ertell

Kevin Ertell — Tue, 01 Dec 2009 18:17:00 +0000

Thanks for your comment, Martin. I completely agree with you that we can’t moan about it. We’re going to have to adjust out models. I just caution that if we all make shipping free all the time, it’s going to lose its luster as an offer and we’re not going to maintain the sales benefit from it. We’ll have to build models around free shipping, like Zappos and Amazon have done, that can provide different and more lasting benefits.

By: Martin

Martin — Wed, 25 Nov 2009 10:47:53 +0000

I think John got the point: We can’t do it all and stay in business. In the past, many mail order companies made profit mostly from S&H-charges and interest rates on installments. Internet-companies like Zappos or Amazon have a very different P&L architecture. They can afford to invest in S&H as part of their marketing efforts. More traditional companies are oftenly budgeting on a shoestring.
But if the Internet has proven to be a game-changer (and I mean that to the letter), then moaning will not be a solution. We have to adjust our costs someway, because the customer will probably not honor our economic reasoning. I have seen that more companies adopt the Amazon-strategy of Flatrate-Shipping. Even here in Germany.

By: Kevin Ertell

Kevin Ertell — Wed, 11 Nov 2009 23:39:31 +0000

Thanks for your comment, John. UPS and FedEx are probably loving all the free shipping offers. It seems like they consistently raise their prices while we retailers keep dropping ours. Obviously, that dynamic is not sustainable.

By: John

John — Wed, 11 Nov 2009 21:44:24 +0000

We should be concerned about all the free shipping offers. Customers are already expecting shipping to be free and lots of discounts. We can’t do it all and stay in business. I guess it helps UPS and Fed Ex though.