Any lingering doubt that we have graduated fromE-Tailing 101 has dissolved over the past few months.
In the real-world laboratories of E-Tailing 303, the freeshipping experiment marches on. Most recently,Buy.com announced it willwaive shipping charges on orders over US$99 that weigh less than 20 pounds.
Indeed, shipping deals are the incentive du jour among e-tailers these days.
But the formula for shipping success is still anenigma. And shipping freebies are not likely to work forevery e-tailer, or for every shopper.
I am not surprised to see this wave of shippingbargains. After all, 63 percent of online buyersconsider high shipping and handling charges adeterrent to online purchasing, according to JupiterMedia Metrix.
E-tailers are taking aim at the shipping target with a variety of different promotions.
BarnesandNoble.com (Nasdaq: BNBN) offers free shippingon orders of two items or more. Amazon (Nasdaq: AMZN)shoppers qualify for “Super Saver Shipping” when theyspend $99 or more on items other than toys, videogames, baby products and third-party goods.
Buy.com throws weight restrictions into the mix, and similar deals also abound at FreeShipping.com.
As always, e-tailers want to attract more shoppers who spend moremoney at more frequent intervals. Will free shipping do thetrick? Perhaps for some merchants, but not for all.
For one thing, many e-tailers cannot afford to offer free shipping on a grandscale. Even with standard shipping charges in place,45 percent of merchants lose money on shipping andhandling, according to Jupiter Media Metrix.
This fact helps explain the fine-print restrictions on volume,price and weight. After all, e-tailers are still gunning forprofitability, too.
What is more, free shipping will not convince many shoppers to pump up their order total.
For example, Jupiter Consumer Survey data shows thatjust 3 percent of online buyers regularly increasetheir order size to save money on shipping and handling.
This figure does not bode well for e-tailers that are countingon spikes in order volume and value to offsetthe cost of offering free shipping.
There is no question that limited-time free shippingoffers can fuel online sales spurts. For example,Toys “R” Us (NYSE: TOY) enjoyed a 300 percent annualsales increase as a result of its 2000 holiday shipping promotion.
But it is still unclear whether e-tailers canprofitably waive shipping fees over the long haul.
Buy.com’s combination of price and weight restrictionswill probably make the most sense to consumers, becauseshipping costs typically are calculated based onweight and distance.
So, for an order that weighs less than 20 pounds, $99 just might coverthe item’s cost and most, if not all, of the shippingcosts, depending on the buyer’s location.
Perhaps Buy.com’s experiment will pay off andcontribute to the company’s ongoing effort to revitalize itself.
Shipping deals based solely on price or volume, on theother hand, come across as marketing ploys, which manyconsumers will detect.
And the fine print makes it very clear how some e-tailers cut other services to make freeshipping affordable. For instance, according to Amazon’s freeshipping terms, orders may take an additional three to fivedays to arrive.
Consumers would be well advised to benchmark in-store bookand CD prices in coming months, then watch to seewhether Amazon or BarnesandNoble.com start recoupingshipping costs by inflating price tags.
The fact is that consumers are getting smarter. When theyhear that 45 percent of merchants lose money onshipping, they correctly conclude that more than halfare breaking even or making money.
And e-tailers’ bottom-line watchers no doubt haveensured that their shipping promotions will notsignificantly dent their overall financial status.
So, be wary of shipping bargains and be careful aboutspending extra money or going out of your way toqualify for such deals. Because one way or another,e-tailers will profit from your efforts.