Let's Talk Free Shipping.
Recently Etsy sent me a note to coerce me into offering free shipping on my products by leveraging SEO results as an incentive. When that didn’t work, they offered an opportunity to win $25,000. And then they mentioned if I offered calculated shipping through their postal engine, I would get higher search results.
Here’s the thing.
Free shipping is a myth. Free shipping is marketing manipulation. It’s deception. Nothing, and I mean NOTHING gets moved across this country and certainly not the globe without incurring a cost. My husband was a FedEx courier for years. He didn’t do it for free. He got paid. The trucks broke down. They got fixed. Gas costs money. Packaging costs money. Postal workers get paid, they have health insurance. Stamps cost money. Shippers use technology and real people. People need wages because people eat things to stay alive and they have to pay for that food. Online shopping is possible due to technology. Technology comes at a developmental cost. It all costs money. Every bit of it. Offering “Free shipping” benefits companies who can ship volume because large companies get discounts, not small independent businesses like me. Companies that promise “free shipping” like LLBean and Amazon, etc. ALL pay for shipping but they negotiate bulk shipping costs with carriers like FedEx and UPS and the USPS. They then calculate averages, price breaks and cut-offs to create this impression that you’re getting your product shipped to you for free. It’s bullshit. It’s always been bullshit. It’s a marketing tool to get you to spend more money, period, end of story, See: “You’re only $XX.00 away from FREE SHIPPING!” And guess who spends just those few dollars more? You and I do. Even if we don’t need to but we think we’re getting a deal if we do. It’s a psychological ploy to get you to buy more.
You pay incrementally higher prices on products for the illusion that you’re getting your products shipped for free.
Since I eschew manipulation, I don’t offer free shipping as a “feature” because it’s no way to run a business if you want to stay in business. I am not into marketing illusion. I’m not in the business of freight and shipping, I’m in the art and pottery business. Pottery is heavy and will always cost a bit more to ship than, say, jewelry. I’d rather you, my customer, know the value of what you’re getting from me and the cost of what it takes to get it to you. Right now, I don’t do calculated costs because it requires space and foreknowledge to weigh every package ahead of time and currently, this set-up doesn’t fit my business plan so instead I price everything based on estimating from current USPS Priority Mail package rates. I mail out all my packages Priority Mail because of the tracking and the automatic insurance up to $50. With recent rate increases, USPS Priority Mail rates are not much more than standard First Class so I opt for the slightly faster, tracked delivery. And my shipping rates often only cover my delivery costs, they tend not to cover packaging and the time and effort it takes to get your package ready and down to the post office. In the last two years, I have hit the actual cost of packing and shipping a few dozen times as most times I estimate under and end up eating the cost by several pennies. Only a handful of times have I come out ahead on shipping where I could account for the remainder towards packaging but fortunately, overall, I’m breaking even on the shipping costs.
Here’s another reality about the actual “free shipping” costs being added to the marginal price of all products to give you the sense that you aren’t paying for shipping: YOU the consumer, pay tax on that shipping when that cost is added to the retail price of the product rather than being separated from the retail price of the product. So you’re paying sales tax on the company’s shipping costs. Think about it. Tax is levied on the cost of the product, not the shipping costs. But If I went along with Etsy’s advice and decided to up my retail prices marginally to cover the cost of “free shipping”, you could potentially pay sales tax on that inflated cost and I’d still get to deduct the expense of shipping and postage on my taxes every year. Essentially as far as I’m concerned, you’re helping subsidize shipping costs via a tax deduction for large companies like Amazon and LLBean. Etsy now finds itself as a competitor to Amazon now that Amazon has its “Marketplace” for handmade items. Etsy deciding to position itself as a competitor to Amazon has given way to Etsy and Amazon forcing small independent businesses, artists and craftspeople to adopt a business model suited to large corporations and not necessarily to independent small and micro businesses like mine and many of the artists and craftspeople on Etsy and Amazon Marketplace. In my opinion, you, the consumer, will increasingly be faced with higher costs for fewer choices of quality work because independent artists and craftspeople doing good work who might otherwise have a nice little business and customer base could end up abandoning shop simply because they’re forced to compete on the terms of huge corporations that don’t have the same priorities.
I’m not the first to notice or mention this. Links below.
Carrington Court Direct
Ecommerce Bytes 2016
Fast Company 11/2016
Southern Homebrew 2018
Betachon Freight Auditing 2018