Is Free Shipping really a service offered by retailers to help you save money or, is it a marketing strategy just to make you think you are saving money when you shop with them?
Since the early days of online shopping, merchants have turned to Free Shipping as the most important marketing strategy to get customers to buy, and buy a lot.
A recent study by Canada Post shows that 78% of people consider free shipping as the most important factor in their online shopping decisions and that 79% will buy more just to get the free shipping. Sounds like the strategy is working, but are you benefiting?
First off, we would like to remind everyone that shipping is not free. Neither the couriers nor the postal service move packages for free. Online retailers factor the cost of shipping into what they charge for their goods. The cost for shipping is there, you just do not see it because it is factored into the price.
So what about sites like this that sell food items?
How many stores do you see that offer free shipping on food products? Very few and the main reasons are because the products can be bulky and heavy and the profit margins are not very large. You do see some sites that offer 'free' shipping on food orders but, this is where you need to do your homework to see if you are actually getting a good deal and not paying inflated prices on the goods themselves to cover the cost of shipping.
We did a comparision between shopping with us and another online retailer in the area for the exact same products. The other retailer offers reduced shipping charges when certain order minimums are met and 'free' shipping when the order is over a set amount. To keep the comparison as simple as possible, we compared the purchase of regularly priced items and was having the order shipped to Southern Ontario.
Prices shown were as of October 14, 2024 and do not include any taxes.
First we will start with a typical small order that qualifies for the flat shipping rate of $10 from the other shop.
| A Bit of Home | XYZ Online | |
|
Walkers C&O 6 Pack |
6.29 | 7.49 |
|
Cadbury Dairy Milk Bar 180g |
6.79 | 7.69 |
|
McVitie Chocolate Digestives 266g |
5.49 | 5.59 |
|
M&S Extra Strong Tea Bags |
13.49 | 16.99 |
|
Product Total |
32.06 | 37.76 |
|
Shipping |
13.79 | 10.00 |
|
Grand Total |
45.85 | 47.76 |
A Bit of Home comes out the better bargain in this case.
Now let's add a lot more items to get the order up to at least $100 with the other company so that you would qualify for the lower $5 flat shipping fee. We won't bore you with the entire list of items added however, they include many popular items such as: Yorkshire Tea Bags, Kelloggs Cornflakes, Batchelors Tinned Peas, Cadbury Chocolate Bars, McVitie Biscuits and M&S Biscuits. We can provide the full list if you would like, just contact us.
| A Bit of Home | XYZ Online | |
|
Medium Order Product Total |
88.81 | 103.21 |
|
Shipping |
16.92 | 5.00 |
|
Grand Total |
105.73 | 108.21 |
Again, A Bit of Home comes out as the best deal.
Finally, we will place a large order that will qualify for 'Free' shipping from the other company. The order will include the same items as above plus the addition of some items in jars, dried soup and cans of soft drinks.
| A Bit of Home | XYZ Online | |
|
Large Order Product Total |
126.45 | 149.45 |
|
Shipping |
19.15 | FREE |
|
Grand Total |
145.60 | 149.45 |
Once again A Bit of Home comes out the better deal, even with 'free' shipping from the other company.
Different product combinations may have a different outcome but this exercise shows that you should not make 'Free' shipping the main reason for shopping with a particular retailer.