Shipping costs are an unavoidable part of online shopping. The cost is added onto the final item price and can significantly impact how customers perceive a retailer as well as whether they will shop at a particular store. Stores that offer flat-rate shipping or free shipping may often do well enough in sales that they can absorb the loss of the shipping fees, making discounted shipping a solid business tactic compared to stores which add on additional fees for customers buying additional items.
Shipping Rates of Large Retailers
Large retail companies are always seeking to gain a competitive advantage over one another. Since products can be discounted by only a certain amount before the retailer loses profits, this edge often comes in the form of shipping costs to the buyer. This holiday season, Walmart offered free holiday shipping for people who bought from its website before Dec. 19, while Amazon.com maintained its free shipping on purchases over $25 but still promised holiday delivery at no extra cost. Many companies also offer free or reduced shipping if customers order online but pick up the items in a store.
Customers tend to see free shipping as a better deal than an equal or greater savings offer on the item being purchased. As a result many customers will purchase more when there is a temporary discount such as free shipping, since they see it as a bargain even though they may be spending more money overall. Customers may behave like this because it is more like shopping at a physical store where there is no “fee” for shopping.
Flat Rate Shipping
One common retailer trick for shipping is to offer a flat rate for all shipping orders, regardless of size, amount, or weight. While this sounds like a wonderful offer to someone making a large purchase, it may actually end up being more expensive for someone purchasing a smaller item. Most consumers will not do the actual math on their own, but when the item being purchased costs less than the shipping they may seek other retailers with cheaper shipping or wait for a free shipping promotion.
Customer Reception to Shipping Rates
Many customers do not want to pay for shipping and seek to pay as little as possible in shipping costs, but they may not be aware of the real price of shipping. Shipping costs have started to change the way businesses operate and even where they operate. Shipping costs of parts and materials for assembly are often passed on to the customer as part of the item price, and when shipping costs from around the country or world rise, so do product costs. Customers tend to respond positively to companies and sales that offer discounted or cheap shipping, because they see it as customer service instead of being charged for shopping from online retailers.
Customers do not like paying for shipping fees on top of paying for the actual product. They will likely spend more on products than they would on shipping if they believe the shipping is free. Taking customer attitudes into account when figuring the cost of shipping can go a long way toward helping a business succeed and thrive in a difficult economy.
About the Author
Elaine Hirsch is kind of a jack-of-all-interests, from education and history to medicine and videogames. This makes it difficult to choose just one life path, so she is currently working as a writer for various education-related sites and writing about all these things instead.