Free shipping isn't always free
Shoppers have come to expect free shipping, thanks in part to the rise of online commerce. But that comes with a few unintended consequences.
A UPS driver delivers packages from Amazon.com in Palo Alto, Calif.
Paul Sakuma/AP/File
Every online shopper has probably experienced it: You鈥檝e added all the items you need to your cart, and聽a box pops up that says, 鈥淵ou鈥檙e only $11 away from free shipping!鈥�
There are many ways to get your stuff shipped gratis. Some retailers offer it to shoppers who spend聽a certain amount of money; thresholds often fall between $25 and $99. Other stores, such as聽Amazon, give it to users in exchange for an annual subscription fee. And members can claim rebates to reimburse their shipping costs at cash-back site聽.
But consumers鈥� demand for free shipping comes with at least a few unintended consequences.
Our fascination with free shipping
Shoppers have come to expect free shipping, thanks in part to聽the rise of online commerce, says consumer psychologist Kit Yarrow, a professor at Golden Gate University and author of 鈥淒ecoding the New Consumer Mind: How and Why We Shop and Buy.鈥�
鈥淚t鈥檚 funny,鈥� she says. 鈥淧eople go to the post office or UPS and they have no trouble paying for shipping fees. They totally understand the value of a shipping fee. But when it comes to buying something, it does not compute for consumers.鈥�
An overwhelming 88% of consumers say free shipping would make them more willing to shop online,聽. Consumers found this perk more persuasive than streamlined returns processes or same-day shipping.
David Bell, marketing professor at the Wharton School of the University of Pennsylvania, says that Amazon Prime is driving the perception that shipping should be free. Among other benefits, Prime provides聽members free two-day and even free same-day shipping on a variety of items for a $99 annual fee. This encourages shoppers to place smaller orders, and more of them, rather than waiting until they want聽enough items to qualify for free shipping based on the amount spent.
鈥淚f I qualify for free shipping all the time, that鈥檚 going to make me order more,鈥� Bell says. 鈥淎nd even if some of those orders the company loses money on, over the life cycle of my orders, they鈥檙e making money on other ones, so it probably evens out.鈥�
Retailers can attract more frequent orders with low free shipping minimums, or bigger orders with higher free shipping minimums, he聽says.
You may be charged more for free shipping
Retailers that already have high margins 鈥� that is, the profit from the sale of the item exceeds the cost of聽producing it 鈥� can聽generally absorb the cost of shipping, according to Yarrow. But other stores raise their prices in order to give online shoppers free shipping.
鈥淟ow-margin retailers are saying, 鈥楽omehow or another we鈥檝e got to get these costs back into the hands of consumers.鈥� Otherwise they won鈥檛 stay in business,鈥� Yarrow says.
She聽has noticed that items eligible for free shipping聽are often more expensive than those that don鈥檛 qualify. She recommends consumers compare prices on聽, which calculates taxes and shipping costs, before making purchases.
We used聽the website to compare prices on the Echo Design聽EO30-1720 鈥淐rete鈥� square聽embroidery decorative pillow. The lowest price came聽from Macy鈥檚, a store that did charge for shipping. Stores with free shipping on the pillow聽tended to charge more for the item itself.
For example, in mid-September, Macy鈥檚 charged a $27.97 base price with $9.95 shipping for the item, while Bed Bath & Beyond listed聽a $39.99 base price with free shipping.
Bell, too, recommends vigilance. If a retailer you already frequent begins offering free shipping, check for price聽inflation.
You may be paying more for free shipping
Even if a retailer doesn鈥檛 charge you more for free shipping, you could be paying more of your own volition.
As Yarrow聽points out, people spend money to get free shipping; it鈥檚 tempting to add something else to your virtual cart when you鈥檙e only a few dollars from that threshold. But you鈥檒l be spending more than you intended and possibly more than shipping would have cost. It鈥檚 rare to find an item that聽costs exactly the difference, so you鈥檒l likely pay more than聽the minimum required for free shipping.
In his research, Bell found that consumers prefer free shipping to a $10 discount on their orders. 鈥淚 think it鈥檚 because people feel like it鈥檚 an extra you shouldn鈥檛 have to pay for,鈥� he says.
Take free shipping offers with a grain of salt, and if you find yourself throwing things you don鈥檛 need into your cart to get no-cost delivery, take pause.
鈥淛ust like our grandmas told us, nothing in life is free,鈥� Yarrow says. 鈥淪uch a bummer, but it ended up being true.鈥�
Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email:聽courtney@nerdwallet.com. Twitter:聽.
This article first appeared in .听