The Hidden Costs of "Free Shipping": How We All Pay

The Hidden Costs of "Free Shipping": How We All Pay

I’ve been running this blaster-modding hobby shop for eight years now. It’s been an incredible ride and a pleasure to serve this community. But unlike some other retailers in the world of online shopping, we have always billed our customers for shipping.

On other sites, so-called "free shipping" has become a powerful tool to increase sales and revenue. However, it's essential to understand that the costs of delivering products don't simply vanish. E-commerce platforms employ various strategies to recoup these expenses, ultimately impacting pricing, customer shopping behavior, and waste management. As customers and consumers, being aware of these tactics allows you to make more informed shopping decisions.

Inflated Product Prices

One of the most common ways online retailers offset the cost of "free shipping" is by incorporating it into product prices. This means that there may not be a separate shipping fee listed during checkout, but the customer remains on the hook for the shipping expenses. Worse still, sellers often overestimate that incorporated shipping charge, and customers end up paying more for products than if they paid for shipping separately themselves.

Shopping Cart price comparison between Amazon ($193.96) and Out of Darts ($174.56)

In the example above, we went to purchase a basic springer loadout to compare between Amazon and Out of Darts. We selected a Worker Seagull, two extra Straight 15-Round Talon Magazines, and a 200-pack of Standard-Weight HE Short Darts. Even with a clipped coupon, Amazon charged more for every item and the net total between the two carts differed by nearly $20.

Minimum Purchase Requirements

Another tactic e-commerce platforms employ is imposing minimum purchase requirements to qualify for their "free shipping." While this strategy encourages customers to buy more to avoid paying for shipping, it also prompts consumers to spend beyond their initial intentions, often leading to impulse-buying.

Subscription Services

Other online retailers offer "free shipping" but as a subscription service. Amazon and Walmart are the first that come to mind. While these services are a fantastic value for frequent shoppers, the sunk cost of the subscription persuades customers to spend even more time and money on those websites than they would otherwise. Subscription fees can also add up over time and don’t make financial sense for everyone.

Subscription pricing for Amazon Prime and Walmart +

Other “Free Shipping” Limitations

Even without the other tactics, the "free shipping" label often comes with certain limitations. This could include longer delivery times, restricted shipping locations, or exclusions on certain items. In such cases, customers may find themselves still paying for shipping through additional fees for expedited shipping, delivery to specific regions, or for items that are not covered by the "free shipping" offer.

In the case of our comparison at the beginning, our Amazon cart of four items was split into three separate shipments. Two of those shipments were eligible for "Prime Free Shipping," but all three of them had different delivery times, different packaging options, and differences in "free returns" eligibility. 

“Free Returns”

The cost of processing returns and exchanges is a significant factor that is often overlooked. When customers take advantage of the "free shipping" offer but later decide to return items, the retailer incurs additional expenses in handling the logistics associated with that return. Much of what’s returned to larger retailers goes unsold and thrown in landfills, and, just like “free shipping,” “free returns” ultimately cost the consumer the next time they shop.

How We’re Different

Since shipping isn’t added to our pricing, you’ll find that orders of the same products are at a lower price through us than through larger retailers like Amazon -- even more so when you order multiple items in one combined shipment! It also allows us to offer hundreds of low-cost and low-dollar amount items that wouldn’t make sense to sell on these other platforms.

Example cart of low-cost itemsAdditionally, we pride ourselves on minimizing waste in many facets of the business. Just like how we localized our filament supply chain, we also have taken steps to ensure customer returns don’t merely end up in the landfill. Instead, products are often repaired or used to help with other repairs. You'll find some of these items in our "Spring Cleaning" section of the site as we go through them.

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So next time you see the enticing "free shipping" banner, remember there's often more to the story than meets the eye. Seriously though, we thank you for ordering with us while we take the non-standard shipping approach. I think we’re all better off for it. - Luke Goodman

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Oh yeah. Free shipping can be a complete ripoff. And I really appreciate all the info and the amazing prices OOD has on all their products. I am going to definitely keep an eye our for damaged or returned items.

Cd Thompson

Thanks for explaining your reasoning. I’ve definitely noticed that I tend to shop more at Amazon because of Prime, many items cost a little more to offset the “free” shipping, and everything comes in a 5- or 10-pack to make it worth their trouble, i.e. they hardly ever sell items like individual thumbscrews or MOSFETs. So I see your point and agree in general.

Food for thought: Instead of free shipping, what could you do to increase sales to people like me who hate to pay “real” shipping? I’ll sit on a cart full of products until I get a big enough order to make the shipping cost feel worthwhile, which is sometimes months later. (e.g. I’ve needed some Nemesis thumbscrews for almost a year, but when I finally pulled the trigger on my last order a few months ago, you were out of them.) I’ve put the word out to my local club to let me know if anyone plans to order from you so we can save shipping by ordering together, but is there anything you could do on your end? Maybe monitor abandoned carts and offer a discount to entice those shoppers to come back and complete their orders? Occasionally run shipping discounts in your newsletter? Maybe offer discounts on certain preannounced days, similar to Amazon’s Prime Day or Ollie’s “members only” sales days. I usually place fairly large orders so I don’t know if you minimize shipping costs by offering USPS, shipping in Tyvex envelopes, etc. (For example, most of my Digi-Key orders have cost $4-5 to ship because they come in envelopes by post and take 7-10 days, which is usually fine with me.) Just some ideas.

I love you guys, but I definitely would have pulled the trigger much more often (and probably more total $$ as well) if it didn’t cost me $13.95 shipping to order a $1.50 thumbscrew. ;-)


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