A recent article in MediaPost Publications outlined that more marketers have been offering free shipping this holiday season as compared to last year. More and more consumers found themselves enticed with free shipping versus discounted pricing.
Free Shipping vs. Discounted Prices
Some of my favorite sites like Amazon.comand SwimOutlet.com offer free shipping once you reach a price threshold. I recall one occasion when my wife and I found an extra floaty toy on SwimOutlet.com in order to reach the$75 threshold for free shipping. We have yet to open the floaty toy.
Discounts, on the other hand, can be specific to an item/purchase or a price threshold. I recently purchased several gift baskets to send to clients on WineCountryGiftBaskets.com. The baskets that I purchased were on sale and did not require that I spend any additional money.
Are you spending more because of free shipping?
You are according to the same MediaPost article. Marketing intelligence firm ComScore reports that “the average order value” for offers including free shipping increases by “about 15%” as consumers feel that they are saving money. This statistical very similar to reports from Dave Ramsey that consumers spend on average 12-18% more when using a credit card. So I have to wonder if these two statistics are correlated at all.
For example, Suzy Q is shopping Amazon.com this season and finds that Amazon offers free shipping on many orders over $25. But, her basket total is only $20. So what does she do? She buys another book like any other red blooded American. And better yet, she knows that the extra $5 isn’t a problem since she won’t receive the credit card bill until January.
In this example, Suzy Q appears to have increased her order by 25%! But did she really? I created a basket of goods on Amazon.com totaling $20.27. With shipping, the total came to $25.25. Therefore, by increasing her order size and receiving free shipping, Suzy Q received more goods or value without increasing her spend (unless you count the $0.25).
Conclusion: Don’t spend more just to earn the reward
Do a few calculations. Verify that spending the extra money to earn a discount or promo, such as free shipping, saves you money or breaks even with the non-discounted price as was the case with my Amazon.com purchase.