Why I will NEVER offer Free Shipping
"Free Shipping" is an Illusion.
Seriously... it is a complete scam...
Through the years, I have sold on many different platforms while growing my online presence. In this time, there are a few things that I have a solidified value for and that I try to implement in all ways possible. These things are integrity, honesty, and transparency.
Many of you that have followed me for a while know that I always keep it real. If something doesn't seem right, or if I feel that my customers are getting ripped off elsewhere, I will shed light on it. It is important to me to take a "no bullshit" approach. That being said, free shipping is an absolute scam.
Not only will I not offer free shipping(EVER), but, I will continue to recommend that you do not purchase items with free shipping elsewhere. This stance of mine has and will continue to piss a lot of sellers and platform owners off. I must say, however, that I do recognize that it is my opinion, and just because I feel this way doesn't mean everyone else will as well. But, let me give you a little info, and perhaps you can judge for yourself and see if "free shipping" is something you may or may not want to be on board with.
A Little History
The "Free Shipping" recruitment saga.
When what I will call "the free shipping trend" first started a few years ago, I thought to myself, "Interesting. This might work.". Every platform from Ebay to Etsy started recommending that sellers offer free shipping. They were screaming at me on banners, with "seller tips", and in emails. Apparently, consumer and demographic studies indicate that an overwhelming amount of people are more apt to buy something if it is marked with free shipping promos. At least, this is what we are told. The actual numbers are more along the lines of 20%.
So, after running a test on Ebay and on Etsy, I realized two things. First, I actually made less sales with free shipping. Second, I couldn't figure out how to offer combined shipping. It turns out, free shipping is not at all something that is set up to help online sellers... rather, it is a ploy to make more money for large platforms while ripping customers AND sellers off in the process.Without thinking more deeply into this, I went ahead and ran two tests to see if selling items with "free shipping" would bring in more sales. Like all e-commerce sellers, I wanted to make more money. I mean... that is the point right?
How does Free Shipping Work?
Is shipping actually free?
Shipping is never free. It is true that larger companies are able to strike deals with shipping companies to make shipping cheaper, but even they still have to pay. Realistically speaking, one cannot hand a package to a USPS carrier and expect them to deliver it with no label. Labels cost money, no matter who you are.
In order to make a product appear to have "free shipping", the cost of shipping is simply added to the price of the item. For domestic shipping, this may not be a huge issue other than the combined shipping problem which I will get to a little later in this post, but when it comes to shipping internationally, I truly have no idea how sellers can feel comfortable doing this.
Let me give an example. Below is a picture of one of my best sellers. I took a screen grab from my Etsy store to use as an example. Marked in red is the domestic shipping cost.
Now, I work very hard to offer reasonable pricing on all my items. I use a formula that would be a great subject for an entirely new blog post, so I won't go into details about that now.
As you can see, the base cost of this bead is $14.95. If I were to offer "free shipping", the cost of the bead would be $17.90 for domestic customers. However, how do I account for international customers? The answer to that question is, if I want to be fair to my domestic customers, I can't. But, the item can't be marked with "free shipping" and I can't get that little button if I don't offer "free shipping" to all. So what is the solution?
The way I understand it, many sellers will take the most expensive shipping cost(in my case, it would be international shipping cost for $13.33), add it to the price, and then, if the item appeared to be too expensive for what it is, they would skim a little money off their profit.
I can't even begin to fathom the ridiculousness of this, especially since I pay myself under minimum wage for my time as is... If I were to follow this model, my bead would be $28.28!! This is not ok. Not only would domestic customers have to pay $10.38 more per bead above their shipping cost, but they would have to do it for each item they purchased! Combined shipping under this formula simply does not work.
A very important necessity.
On my platforms, I offer automatic combined shipping with the exception of ebay. Due to Ebay's functionality, I offer shipping overage refunds instead, which is another reason why I often go long periods of time without listing on ebay. Ebay is another story entirely.
Automatic combined shipping means that when you purchase multiple items from me, the cart automatically charges only one shipping fee, saving you money. You could buy one bead or twenty beads from me, and still, you would only pay $2.95 if you are in the USA.
When shipping costs are rolled into an item's price, the websites cart system is not able to grant the discount needed to provide true combined shipping. Here is an example:
If I live in the USA, and I buy two abalone dread beads under the "free shipping" formula, my total will be $17.90 + 17.90 = $35.80 with "free shipping". If I live in the USA and buy two abalone dread beads with a posted shipping price and combined shipping options, my total would be $14.95 + $14.95 + $2.95(Shipping) = $32.85 with a total savings of $2.95.
Edit: I completely forgot to mention VAT! When sellers raise their prices to fit the free shipping model, international customers will be forced to pay more in taxes and VAT when they import your items. How is this fair? How is this sustainable?
Many handmade sellers also sell in storefronts or physical retail locations.
This addition is an edit to my original post, as I did not previously discuss this. It did not occur to me right away, as I currently am only an eCommerce brand.
If you are a seller that sells in physical locations or in person, and your customers also purchase from you online, pricing consistency is a big deal. If customers notice that there is a large difference between the price of your items online and in person, and you claim to have "free shipping", this can cause you to loose consumer trust. Additionally, this perfectly highlights the fact that you have hidden fees rolled into your price online... which, is in fact, ILLEGAL. I talk about this further down this post.
How Large Platforms and Sellers Benefit
Why the "Free Shipping" model is really promoted.
Recently with all the new changes happening over on Etsy, it has been rather difficult to keep up... but one change had sellers like me paying attention. Starting in July last year, Etsy began collecting a 5% transaction fee on shipping. This means that they are taking a cut of money from something that is already claimed and collected for a purpose... that being, to purchase a shipping label.
Many folks have started realizing that this policy was put into place to do two things. One, for a good reason, and two for a greedy one.
Firstly, back in the day, some sellers used to make their items appear cheaper than they actually were by making the item price lower and inflating the shipping cost. This, understandably, lost platforms like Ebay and Etsy a lot of money because they never used to collect fees on shipping.
Secondly, these large platforms are always looking to make a buck. So, rolling the cost of shipping into item prices, especially if they account for international shipping costs, will only make the platform more money in fee collections.
While some folks might look at this as just the price of doing business, I simply cannot get on board with it. As soon as I took the time to research this thoroughly, I have come to the conclusion that I will continue to be transparent and opt to charge shipping fees for the actual cost of shipping.
The Legal Issues *EDIT*
I just learned this information 7/16/19. I'm no lawyer... but, I can read and follow federal guidelines.
Below is a quote from the eCFR's(Electronic Code of Federal Regulations) GUIDE CONCERNING USE OF THE WORD “FREE” AND SIMILAR REPRESENTATIONS which can be found HERE.
(b) Meaning of “Free”. (1) The public understands that, except in the case of introductory offers in connection with the sale of a product or service (See paragraph (f) of this section), an offer of “Free” merchandise or service is based upon a regular price for the merchandise or service which must be purchased by consumers in order to avail themselves of that which is represented to be “Free”. In other words, when the purchaser is told that an article is “Free” to him if another article is purchased, the word “Free” indicates that he is paying nothing for that article and no more than the regular price for the other. Thus, a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased, by the substitution of inferior merchandise or service, or otherwise.
This is something that simply cannot be ignored. Using Etsy as an example again, their free shipping model in which sellers are encouraged to roll shipping prices into their item prices as a hidden fee appears to be in contrast to USA federal consumer laws.
My take from this is that Etsy is able to wash their hands of legal responsibility by claiming that sellers have the final decision regarding their business practices. Thus, if a lawsuit is brought against a seller due to hidden fees, Sellers will bear the brunt of any and all legal repercussions, not Etsy. That is what those high-paid lawyers are for...
Additionally, further thought regarding this could lead one to come to the conclusion that Etsy is involved in active collusion. Though I can't say for sure and don't claim to know. Below is a definition of collusion as found on Wikipedia.
Collusion is a secret cooperation or deceitful agreement in order to deceive others, although not necessarily illegal, as a conspiracy. A secret agreement between two or more parties to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair market advantage is an example of collusion.
Over-all, this seems like a dirty business.
Other companies such as Amazon have different methods in place that could avoid this type of legal trouble. Amazon prime for instance, is a service buyers actively pay for in order to benefit from free shipping discounts. However this service costs over $100 a year and can easily be represented as a "pay ahead of time shipping plan".
Rafi And Klee perfectly sum up this legal subject here in their youtube video:
Something for Sellers to Consider
Your customers are not stupid.
Just because buying and selling online can be more convenient, doesn't mean that customers are going to throw their money away. From one seller to another, please help educate your customers about the free shipping trend, and do not jump on the bandwagon whims of large platforms and set yourself up for legal liabilities. In the end, folks will buy your items because they want the items, because they are reasonably priced, and because you sell with integrity... NOT because of fancy pricing gimmicks.
Please, help end this trend! Though some consumers may not know about this, it doesn't make it right, and it certainly isn't healthy for the market in the long run. Allowing folks to assume shipping really is free is detrimental and can lead to issues should our shipping methods and carrier options change in a substantial way.
Something for Online Buyers to Consider
Be cautions when buying multiple items.
Know what you are buying. When buying multiple items online that are marked with "free shipping" you should consider contacting the seller to inquire about their actual shipping costs, and whether or not they have discounts available if you purchase more than one item. Of course, this will not apply to everything as some items are easier to ship together than others. But, it doesn't hurt to be a little bit proactive so that you don't get ripped off.
Please also note that not every seller will be accommodating. In fact some might be just a bit peeved that you are implying they are ripping you off in the first place.
You cannot squeeze two lemons to make an orange.
Thus, I will never offer free shipping, unless it is an ACTUAL discounted price.
Please note that all opinions and thoughts in this post are my own. All legal subjects discussed are ideas and theories, not necessarily facts. I'm not a legal professional and don't claim to be one. I'm simply a concerned seller that doesn't want to be mislead into breaking the law and the thoughts above are my personal interpretation of the law as read.
Here is my Video About This Topic Sans The Law Section
10 points to anyone that can stand to listen to me ramble...lol.