The Rising Cost of Free Shipping

Shoppers may have more incentive to buy online this year: the sales are as big as -- if not better than -- in-store offers and many retailers are offering free shipping. The catch, say experts: Shoppers have to spend a lot more.

Some 93% of stores will offer a free shipping deal this year, up from 85% last year, according to the National Retail Federation arm Shop.org's projections. But unlike last year, when many retailers offered free shipping on everything, regardless of the amount spent, this year consumers have to pay a minimum, says Luke Knowles, founder of free-shipping-focused deal site FreeShipping.org. In the NRF's annual study of Cyber Monday offers, for example, 30% of sites said they'd offer free shipping on some orders. Last year, 22% offered it on all orders.

Even though online sales are projected to rise 15% this holiday season, according to Forrester Research, experts say the cost of shipping can still make or break a purchase. "Free shipping has become the expectation for consumers," says Kit Yarrow, a professor of psychology and marketing at Golden Gate University in San Francisco, Calif. Retailers raising minimums on their offers helps them avoid a loss on shipping fees and encourages consumers to spend more."This really doesn't work out for the consumer," she says.

Shoppers best defense is to look at overall deals and not just the shipping fee, says Dan de Grandpre, founder of sale-tracking site DealNews.com. For example, many sites allow only one coupon code per order. In those cases it's best to compare all available offers to see what's cheaper -- a code for shipping, or one for a discount on the purchase price. It's also worth checking for free shipping offers on particular products. At this time of year, retailers including Wal-Mart and Best Buy put special shipping promotions on hundreds of items that carry a charge during the rest of the year, he says.

A growing number of sites automatically offer free shipping on orders of a certain amount, no coupon code required, Knowles says. In the past year, JC Penney, Macy's, L.L. Bean, Gap and Nordstrom all moved to that model. Such offers let shoppers grab free shipping and still use a coupon code (or two) to further reduce their total. Old Navy, for example, offers free shipping for all orders over $50, leaving visitors free to add recent codes for 15% off, say, and an extra 10% off on Tuesday when you use a store credit card. (The order must still total $50 or more after the discounts to get the free shipping.) Even if the free shipping is automatic, it's still worth reviewing coupon sites to see if there's an even better offer, he says. Old Navy and Gap "silver cardholders" get free shipping on any order, no matter what the dollar amount, when they use the code "SILVER."

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The Rising Cost of Free Shipping

Wednesday, November 30, 2011

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