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Is Free Shipping Worth It?

Stephanie Christensen

Free shipping has become a common expectation among online shoppers, so much so that "Free Shipping Day," which joined other banner holiday shopping days like Black Friday and Cyber Monday in 2008, attracted more than $1 billion in sales when it was held on Dec. 16, 2011, according to comScore data .

It Doesn't Lead to S pending More Than You Intended
According to one Forrester survey, 27% of respondents said they have made unplanned purchases to meet spending thresholds to get free shipping; therein lies one of the conundrums of this now commonplace marketing tactic that consumers have come to value. In the same survey, 57% of respondents said they tend to favor retailers who offer free shipping versus those that do not. Because free shipping isn't free to the retailer, the offer usually comes with a minimum order stipulation, which allows retailers to ensure that most transactions are profitable.

In such cases, the value of free shipping has everything to do with why you're buying. Did you intend to buy the item before you read the free shipping offer, or are you simply trying to meet the minimum amount required for free shipping? If you're shopping for a $35 item, for example, and buying additional merchandise just to meet a $50 free shipping requirement, do some comparison shopping to determine what really costs to pay for the shipping, instead of blowing your budget. Though your inclination may be that you'd rather pay for unintended items versus wasting money on shipping, spending more money just to get something free is not a value, especially if you're charging the purchase to a credit card that you can't pay in full.

It's a Better Value Than a Product or Percentage Offer
Just as you must determine the real value of the shipping costs you could avoid before deciding if free shipping is a good deal, consider alternative offers in lieu of free shipping. Scour sites like Retailmenot.com or Couponchief.com to track down any other percentage off coupons or dollar-off discounts that other shoppers may have shared on the web, and run the numbers to make sure you're getting the best deal.

It Doesn't Require a Subscription
Free shipping clubs (like Amazon Prime) have become a popular tactic retailers use to provide free shipping, while mitigating the loss associated with the offer. Free shipping subscriptions aren't always a negative, particularly with a site that you regularly order from because of breadth of merchandise. Indeed, you may actually save yourself some money with a free shipping program. The problem, however, is that once you have a paid the shipping subscription, you become brand-loyal to that retailer and may stop comparison shopping for the best price and selection.

The Item is Heavy and Hard to Find
Retailers know that product category is a key driver of whether free shipping will make them money; lightweight items like clothes or small electronics that are already packaged by the manufacturer cost less to ship. Use the same gauge retailers do to determine whether free shipping is a good deal for you. When buying merchandise that is bulky, awkward and inconvenient to load into your car or house, free shipping can be a valuable convenience.

You Trust the Merchandise Quality and Service
Aside from what the retailer pays the carrier, it must absorb costs to inventory items, pick and pack them, and hire the workers to execute the fulfillment process as part of a free shipping offer. Particularly for small businesses that lack the buying power of major retailers, there is a point at which free shipping is not profitable. At that point, they must either miss the business associated with offering it or cut corners in other areas, which may include product quality and service. If you're taking a gamble on a new retailer just to get free shipping, make certain you're aware of all the policies involved, including returns.

The Bottom Line
As the saying goes, nothing in life is free. So, be aware of these things before you decide whether free shipping is worth it.

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