And What About That "Free" Shipping?

Over the last decade or so "Free" shipping has become common with many retailers.  Companies like Amazon, Staples and many other large conglomerates and multinational companies have used this tool to generate business.   And for multi-million dollar companies like this, that can leverage their size with shippers like UPS or Fed-Ex perhaps it works.

But what about "Mom-and-Pop" shops, or even small to mid sized companies, does it make sense?  I mean does anybody really think they're getting free shipping?   Or, is it more of a ruse, a kind of marketing gimmick?  And so here is our take on "Free Shipping"

I could very easily "average" our shipping cost into the retail price of our products and pretend that we too offer free shipping.  Its simple to do, clean, and I don't have to work very hard.   But let me give you a simple scenario on shipping a product to two families and see what you think.

John and Jane Doe from Florida, and Romeo and Juliet from Iowa want to buy an aeration system from us.  The price is $1,000.00 retail.  But I want to offer them "Free Shipping".  So in my efforts to do this I have calculated that the "average" cost of shipping this product is $100.  It cost me $50 to ship to states close by, and as much as $200 to ship to places like Florida.    And so, I'll take the average, mark my product up $100 to $1,100 retail to cover the average cost for me to ship.  Simple enough I guess.  Unless of course I'm willing to just "eat" that cost.  Yikes! I wont be in business long if I do that.  And so the new retail price has to be $1,100.

Now, the question:  Our warehouse is located in River Falls, WI.  Do you think its fair for Romeo and Juliet from Iowa to pay the same shipping cost as John and Jane Doe from Florida?  Is that really an honest way to do business?  I could easily ship this product to Romeo and Juliet in Iowa for $50.  And the true cost to ship to John and Jane Doe in Florida is $200.  Do you think John and Jane would just expect to pay more?  Probably,  Do you think Romeo and Juliet would just expect to pay less?  Of course.   And to take it even further, we have customers that pick up at our warehouse fairly frequently.  Wonder what they would think about this?  My guess is they'd prefer to pay $1,000 and not $1,100.

So whats the deal?  Why do so many small vendors do the "free shipping" thing?  In my opinion, its just being lazy.  Yep, lazy.  Its just so easy to work the price of shipping into the price.  Make a little here, lose a little there, whats the big deal right?   I guess they don't mind wasting YOUR money.   Furthermore, many of our competitors are nothing more than middlemen for the MFG.  Their margins are lack luster to be sure and then they just eat the cost of freight.  Hmmm, sounds like a recipe for a "here today, gone tomorrow" company.

The truth is this, it has taken us years to "fine tune" our shipping tables with UPS to charge you only what our cost to ship the item will be.  Our goal is to just cover our cost to get our products to you, that's it.   And we're very good at it.  If you live in Florida, Maine, or California you just pay more in shipping.  If you live down the street you pay less, could it be more fair than that?   And large order motor freight customers will be even happier.  We have a huge discount from our carrier.  We only charge the customer what our invoice from our carrier is going to be.  So the next time you see the words "Free Shipping" at check out.  You'll remember John and Jane, and Romeo and Juliet I hope.

Comments