Consider the Cost: Why Free Shipping Is a Shared Expense

Free shipping is basically expected nowadays. When shopping online, you may be caught off guard if you see a shipping charge added at checkout. At that point, you have a couple of options: decide if the product is worth paying $5-10 extra to have shipped; search online at another retailer who does offer free shipping; or, take advantage of in-store pickup if there’s inventory near you.

Free shipping is an incredibly powerful tool to motivate a purchase, but it isn’t really all that ‘free’ – it’s just a matter of who covers the cost. And in a cultural climate more concerned with protecting the environment, retailers and shoppers aren’t the only ones sharing the burden.

The Sliding Scale of Free Shipping

I mentioned the motivating power of free shipping and the role it plays in the buying journey. If I know a retailer offers it, I’m more likely to spend my money there, and that translates to my increasing loyalty. The way I see it, free shipping is a bit of a sliding scale, where the retailer or the shopper covers a smaller or larger portion of shipping expenses, depending on the scenario. The company may eat the cost at one time to win consumer affinity, but through devoted shopping dollars, the consumer helps to lessen the blow.

What immediately comes to mind as an example is my identity as a Target REDcard holder. I don’t have to pay for unlimited, free two-day shipping, as one does with the membership cost for Amazon Prime, but Target sure does get a chunk of my budget each month. Big picture: I see it as a great deal. The retailer is rewarded with my loyalty, and in the end, we’re both pretty pleased.

Because of my work with Ketner Group client OrderDynamics, I watch the industry closely for trends related to order fulfillment and shipping. Our friends at OrderDynamics put out a study this year called Omni-2000, in which they found that 75.7% of retailers with an eCommerce site provide free shipping with a minimum purchase. In cases like this, the retailer foots the bill to deliver your goods. However, the cost to you as a consumer is often spending more than you intended. And because you’re increasing the size of your order, the added sale helps to reduce the hit the retailer will take for covering shipping costs.

It all costs someone something – it’s just a matter of how you look at it.

A Greener Future for Free-Shipping Shopping Habits

Financial costs aside, retail fulfillment has become increasingly complex, and the associated logistics have ramifications for the environment as well. Turning orders around more quickly means more trucks are on the road. In the name of timely and convenient delivery, those trips aren’t optimized to fit the most boxes in one vehicle at a time. Plus, there’s the additional waste associated with cardboard boxes and packing materials.

With Earth Day right around the corner, this is an interesting conversation to have in the industry. I found this short five-minute video extremely insightful, discussing the environmental cost of two-day shipping, if you’re interested!

I believe because of present discussions around global warming and carbon emissions, we’ll start to see retailers become more vocal about their proactivity to reduce their global impact, while still coming through on omnichannel convenience. And if it’s an important issue in the heart of its customers, retailers ought to gain even more loyalty in the process.

I’m also curious to watch for the emergence of other fulfillment channels as retailers work on efficiencies, cost savings and waste reduction efforts. Will there be wider availability of BOPIS, BORIS and ROPIS offerings, perhaps? Incentives besides free shipping to nudge conscious consumers to select a “greener” option? Driverless cars and drones? We’ll have to wait and see.

Videogames, Stethoscopes and Retail Robots: South by Southwest 2016 is going to Rock

SXSW_Platinum-2015-RGBWhen the experts from a diverse range of disciplines come together under one roof, each with their own unique perspectives and hard-earned knowledge, invaluable insights are to be expected. This March, some of the world’s most respected medical innovators, videogame designers and marketing all-stars (just to name a few) will join the panels of South by Southwest 2016’s Interactive Series in Austin, Texas to dissect, debate and present the most groundbreaking discoveries in each of their respective fields. Of course, they will all be awesome, but there are six in particular that we are dying to see (and you should be too). We have a handful of clients throwing their hat in the ring to speak on some incredible panels, and we encourage you to support the panelists with your vote, and tell us which presentations have you most excited!

First up is Order Dynamics, resident experts at retail data analytics. They will dive into the world’s toughest industry to find the perfect commerce cocktail with their discussion on “Retail Data Mixology.” John Squire, President of DynamicAction, will join Kevin Ertell of Sur la Table, Laura SXSWHeller of FierceMarkets and Forbes, and Dr. David Bell, a consumer shopping behavior expert from the University of Pennsylvania, to uncover key ways to pinpoint customer and marketing needs. Show your support by voting them into the Panel Series here.

As well, 360pi, big data pricing analysts, are prepared to give you a glimpse “Inside the Retail Vortex.” They will share valuable insights along with Paula Rosenblum of RSR Research, Andy Voelker of Ace Hardware, and Dana Klein of Reebok Adidas Group, on what the “new normal” of retail looks like for brands who are adapting (or not) to the online surge. Vote them into the Panel Series here.

Shopatron will save you from the wait of online shopping and divulge how to avoid the retail “time suck.” Learn from CEO of Shopatron Ed Stevens and San Francisco Chronicle columnist and author Thomas Lee about how retailers can improve customer sentiment and reduce shipping costs by getting smart about local product searches. Vote for this panel to be officially selected into the Series here, and we’ll see you there!SXSW2

Mirakl will tell us the story of “How the Online Marketplace Ate Retail.” We all love shopping online in some form or fashion – but how much of that is done on Amazon, and now Jet.com? While it may be ideal for consumers, retailers are still working out exactly how to keep their profits up and overhead low. Join Mirakl’s CEO for the U.S. Adrien Nussenbaum, Paula Rosenblum of RSR Research and Forbes, and Chandhu Nair of Staples as they provide insights on our web-based retail era. Show your support with a vote here, and we’ll see you in Austin!

Watch human and machine collide with Edgecase’s Lisa Roberts and their fellow panelists Brian Schultz of Crate and Barrel, John Perasco of Urban Decay, and Alicia Fiorletta of Retail TouchPoints as they present “The Future of Retail: Human + Machine Curation.” Show them your excitement and support with a vote here to see just how machine learning can revolutionize online shopping.

Want to be a retail fortune-teller? Retail Innovation Consultant Rachel Brooks of ThoughtWorks will predict the “Future of Cool” for retailers in the fashion industry alongside Google’s Fashion Data Scientist Olivier Zimmer, Zappos’ Content Editor Kandis Yoakum, and CEO and Founder of Shoptelligence Laura Khoury. They’ll discuss how technology can help retailers deduce up-and-coming fashion trends, but they need your vote here to officially join the Series.

With such a compelling lineup, innovation is expected, breakthroughs are likely, and fun is a definite. Place your votes now (deadline is this Friday, September 4), and we will see you in March!