Today we'll be weighing in on the 'Free Shipping' debate.
What is Free Shipping?
It has now become commonplace for online shops to offer 'Free Shipping' to their customers in order to maintain a competitive advantage. As a consumer myself I can totally understand the appeal, I mean who would not want free shipping?
First of all it is important to understand the difference between something that is advertised as being free and something that is actually free.
Most businesses will flaunt their offers of 'Free Shipping' when in actual fact we all know that there is no such thing as a free lunch. Let's put it this way:
Shipping an item from A to B costs money. It is never free.
This means that somebody is paying for it and whether you like it or not, 9 times out of 10 that somebody is YOU the customer and not the person you are buying from. When you think about the journey and logistics involved in getting one package all the way from the other side of the world direct to your doorstep it is pretty mind boggling. Companies like FedEx have become so efficient at delivering parcels that we as the consumer take it for granted.
FREE! Just pay shipping
Even though this is the exact opposite model, it is a perfect example of the type of 'Freemium' marketing tactics that are being used by some companies / scam artists.
You've probably seen something similar to this. A company claims that they are giving away their products for free and that all you have to do is pay the shipping cost. It almost sounds too good to be true, and that's because it is.
Do not fall for this marketing scheme!
What exactly is wrong with it, you may ask? Well, let's say the shipping cost is $5 and the product only costs them $2.50 or less to manufacture. They are still making money from your shipping by claiming that the product is free when it is clearly not! This is a very clever, deceitful tactic and yet we still see people falling into this trap.
The truth of the matter
I'm just going to cut right to the chase.
If you see 'Free Shipping' it is unlikely to be genuinely free. What do I mean by this?
Online shops are in the business of making money. So to actually offer genuine free shipping is very difficult unless you have a warehouse that is churning out tens of thousands of orders per day. In which case you can apply to get a volume discount from your shipping partner for anything up to 70-80% of the original shipping cost. But for most small businesses we simply cannot get anywhere near this figure.
In actual fact what tends to happen is that in order to compete with the big boys, these much smaller businesses find a way to increase the overall price of their products in order to offset the lost profit on shipping. As a customer, this means that your shipping is actually not free because you are still paying for it elsewhere.
The 'Cardboard Box' effect
The effect that 'Free Shipping' has on the industry and on consumer behaviour is something I like to refer to as the 'Cardboard Box' effect. Let me explain.
In Hong Kong we have a very high cost of living in comparison to the low rate of income. As a result of this, the older generation are now having to resort to other means of income such as collecting unwanted cardboard boxes and selling them for scrap. Because our studio is located in an industrial area, we see these poor souls trolleying their boxes up and down every day in the sweltering heat.
Here's where the plot thickens.
Each box is valued by its weight, so one day a cunning old lady decided to use water to soak her cardboard boxes to make them heavier. Of course this worked for a while until other people caught wind of the idea. Before long everybody was soaking their boxes in water and so the recycling collectors simply included the extra weight in their calculations to account for the added water, meaning that those who soak their boxes are wasting their effort and those who do not are losing out.
Free Shipping has become a necessity
Much in the same way that soaking your cardboard boxes has become a necessity, offering free shipping has now also become the industry 'norm' thanks to Amazon.
Image source - The Meme Book
So, how about Free Shipping at Stamptitude in the future?
This is something we get asked a lot and while we may not be able to offer genuine free shipping, we do try our best to reduce the shipping cost by keeping it to an absolute minimum and by only charging our customers nearest to the exact amount that it costs us to ship your items. With our current shipping partner FedEx we already receive a fairly substantial volume discount which helps to lower the cost of our Express Shipping dramatically.
As a customer there are other ways to receive free shipping but it may require you to spend a little extra before you can be eligible to receive it. This is where the 'spend x amount and receive free shipping' model comes in to play. What is essentially happening is that the company is agreeing to pay for your shipping so long as you are happy to spend a little extra. While we also do not agree with this approach, it is a much more practical solution to the problem.
Let us know in the comments section below about how you feel paying for shipping when ordering online? My guess is that the majority of our customers understand that shipping is not free and that so long as it is reasonable and there are no added fees there should be no problem.
Using Free Shipping as a Way of Doing Good
The only time we ever do GENUINE free shipping is when:
a.) We ship locally. Anytime somebody buys from HK, we offer free shipping and we do this because shipping costs within Hong Kong are so negligible that it is not worth charging for.
b.) When we have our annual charity drive whereby we raise money on Black Friday / Cyber Monday through a Free Shipping promotion, the proceeds of which then get donated to a worthwhile cause.
If you are a business owner and would like to learn more about how you can join the Cyber Monday, Giving Tuesday campaign effort feel free to visit the official website - https://www.givingtuesday.org/