People hate paying for shipping because psychologically people can not accept different prices after seeing the original price, and people expect online shipping to be free because of the free shipping service provided by some e-commerce sites.
Psychological perspective
The first impression of the price tag makes consumers think that’s the price they are going to pay. Consumers will most likely abandon the shopping cart when they see a much higher price after adding shipping costs.
The big attraction of online shopping is convenience. The items people purchase can deliver to the door.
If consumers purchase online not only pay the product itself and also the tax, and shipping, in addition, experience the wait and the return hassle and at the same time need to share their ID and credit card with the online store. Consumers will drive to the store and pay the same price but get what they need immediately.
The free shipping service provided by other e-commerce sites, makes people expect online shipping is free. For example Amazon’s prime, most eBay sellers provide free shipping.
Financial perspective
When consumers see an item marked as $50 on the website, they are prepared to pay $50 to get it. When they click on the detail and find out that on top of $50 for the product, there is a 6.5% tax of $3.25, $5.99 shipping, then the total cost of this item is $59.24, most likely consumers will abandon the cart.
Many economic experts analyzed that if the shipping cost is more than 10% of the purchase, it is an obstacle to the purchase
Why do people think shipping should be free?
Below are several major reasons that people think shipping should be free
- E-commerce sites do not have physical stores, they saved a big chunk of cost on rent, and utility bills and they should pass some of their savings to customers, like free shipping.
- E-commerce sites do not need to hire so many employees, such as employees who work at stores, so these online businesses have less overhead and pay less on employee salaries.
- Free shipping promotes these online businesses.
Will people pay more for an item with free shipping?
Most time, NO
People will not pay more for an item just for free shipping unless they do not know the market price for this item.
Will people most likely buy something with free shipping even if they know the cost is built-in?
Quite surprisingly, there are quite a few people who say yes to this.
People choose yes because they like straightforward prices. When they see the free shipping they knew the price they see is an all-in price. They will not be surprised until check out to find all kinds add on charges such as shipping, handling, custom, etc.
Why company ship separately when you order multiple items online?
I used to think these online stores are nuts. Don’t they know it costs more to ship my 5 items in 3 different packages? When I dig deep I found out that it cost less for them to ship separately.
The different items you purchase are one order to you but different warehouses to business owners.
Amazon has roughly 110 fulfillment centers nationwide. 5 items on your order may mean 2 of them in one fulfillment center, and 3 of them in the other 2 fulfillment centers.
If Amazon brings all your 5 items to one fulfillment center, consolidates, then ships to you, it going to cost Amazon more money than ship to you separately from the different fulfillment centers.
It costs Amazon more to consolidate and ship to you in one package because amazon sort twice, and packed twice. One customer’s order used manpower in 2 warehouses to touch it and complete it. Amazon only works on one item once by shipping it from different fulfillment centers.
I always receive my Walmart order in 2 to 3 different packages. It is the same reason because these items come from different fulfillment centers.
Why cost more to send a package compared to ordering something?
The main reason is that an e-commerce site has a volume advantage over the individual on the shipping rate
Almost all major e-commerce site has contracted with the major logistics company. Based on forbes.com that amazon ships 2.5billion packages a year in 2019, and the number probably doubled in 2022. With such a shipping volume, amazon has great bargaining power on shipping rates with UPS, FedEx, and USPS.
When you send just one package through UPS, you get the standard rate for one package. that’s why it cost more for you to send a package than to order products online.
How to avoid shipping fees?
- Wait longer and pay less or maybe free shipping
- Meet minimum order quantity or order amount to get free shipping
- Join the membership of the site, and pay membership fees such as amazon prime, and Walmart plus to get year-round free shipping
- Make sure your membership fee is justified by the volume or frequency you ordered from this site
