Online Shopping and Fulfillment: Who Really Pays for Free Shipping?

We all learned in high school economics that “there is no such thing as a free lunch”.  The buck has to eventually stop somewhere, whether it’s coming from your pocket or someone else’s.  This economic principle begs the question, “is free shipping really free?”

In an effort to create an incentive for consumers to shop, many e-tailers offer free shipping, especially around the holidays.  While some of these offers come with stipulations (i.e. a minimum purchase amount to qualify) consumers have come to expect free shipping on most transactions.  Companies like Amazon, who are more concerned with market share than profit margins, offer free, expedited shipping with an annual membership.  Other large retailers like Target and Barnes & Noble are offering free shipping on online orders during the holidays to capture some of the e-commerce activity; but is that a sustainable option for large, brick and mortar retailers?  As free shipping becomes the norm, will companies be forced to recoup the logistical cost in other areas?  A recent article by Supply Chain Brain takes a closer look at the true cost of free shipping.  Click here to read more.