“I’ll probably go with them because of free shipping.” – R.S.
I heard this one recently from a customer. A fair enough statement, and as a consumer I could see myself saying the exact same thing.
So why would I write a blog post about it?
You’ve all heard sayings like:
• The best things in life are free.
• Anything worth having is worth paying for.
• Ain’t nothing free.
Now, the ‘best things’ in life probably aren’t being delivered via UPS. In that mindset shipping isn’t really something you ‘have’ so it might not feel worth paying for. However, the ‘ain’t nothing free’ statement, that’s one I can speak to.
CorkSport has been around for well over a decade now, and we have learned a few things about selling and shipping parts. The first thing everyone should know about online part sales is this: There really isn’t such a thing as free shipping. The concept itself doesn’t make any sense really.
To really understand where I’m coming from you need to think about a few things. Why would a company offer free shipping? I think there are several possible answers to this question. First, they want new customers and they are willing to take a loss with the idea that market share and the total lifetime value of a consumer will justify the short term loss. Generally, this is only sustainable for very large companies (like www.amazon.com) who constantly bring in new customers by the thousands.
Second, they don’t quite lose money on the sale, but the shipping charge eats into their margin. If you have low overhead (like selling parts out of your garage) or amazingly high volume then you can run off lower margins and continue to offer ‘free shipping’. How can you hope to sustain a business in the long run when the shipping carrier makes more off your business than you do? To be nice, this is difficult, but not impossible in some industries.
Third, and lastly, you can raise your prices to include shipping then give the customer “free shipping”. This really amounts to nothing more than a marketing gimmick. The one benefit I see to this scenario is that it simplifies the ‘cost’ calculation for the consumer by having a nice round number for them to use.
Let’s go back to R.S. for a moment. A while back he tasked us with giving him free shipping on something he wanted to order from us or he would buy from another company. Ordinarily this wouldn’t be surprising, but the one caveat here is that our price + shipping was equal to or less than their price with ‘free’ shipping. This put us in a very strange place, because to us it was obvious that the customer was being fleeced by the other company and their ‘free’ shipping. We tried to make sense of this, but all I can figure is that maybe he just hates math.
Where I am going with all of this is that I am asking you, our customers, this question: Should we raise our prices and provide free shipping or stick to our current strategy of letting you know how much of the ‘cost’ of your part is transportation of the part from us to you?
Maybe someday when we’re a billion dollar company, we just might offer ‘free shipping’ as a means to maintain our monopolistic rule of the market. Muuhhhaahahaha.
Until then, the only valid reason we’ll have to offer ‘free’ shipping (see raising our prices) is if you tell us it makes it easier for you to compare our products to the competition. See scenario #3.
I don’t want to offend anyone or start trouble, but I’m just being honest with you. I feel that transparency of process is important in this situation, and I welcome your feedback, either via email or blog comments.
We continue to appreciate your business and invest our profits back into Mazda performance.