Free Shipping is Not Important

by Paul O'Brien / Monday, 23 April 2007 / Published in eCommerce, Insights / Research

I’ve been out of the office for the past week, welcoming my second daughter home. She arrived 9 days ago and, of course, my mind still turns to the industry that keeps us all employed. As you can imagine, we’ve started receiving gifts and presents from friends and family through FedEx, UPS, and the USPS; through which, I realized my greatest frustration with ordering online.

For the last few days, I have scoured the internet in search of comprehensive research about shipping preferences and can only find (repeatedly) apparent validation that customers want Free Shipping. I don’t think so.

We all know how survey results can be tainted by the form of the question & answers. In a multiple choice survey, online shopping studies often ask the most important consideration when buying online followed by answers including: discounts, customer support, warranty, free shipping, comprehensiveness, etc. When presented with those options, I too would say free shipping is the most important; after all, prices are rarely, significantly competitive leaving whether or not an online store has free shipping as a significant deciding factor: if they don’t, I don’t buy. But is that really what customers want?

Let me give you a sample of my own experience from the last week. Of 5 packages delivered, only one was delivered to someone in the house demanding a signature of receipt. 2 were left, modestly secure, within our front gate, while it was raining. One was left outside the front gate in the grass (wet grass) while the last was left in our community driveway.
I realized then that what I (what customers) want is security, reliability, and reassurance that they will get their order safely and without risk.

How many people really need something immediately?
When I walk into a store I have the product in my hands immediately after it leaves those of the store clerk, immediately after I’ve paid for the product. Online, product is shipped through any number of shipping companies, none of whom assume full responsibility for the care of your product (at best, they insure your product but you are still left to deal with whatever might happen). During that time your order may go lost, stolen, damaged, misplaced, or simply left on your doorstep for days in the elements. In truth, I rarely need what I buy right now, I need the satisfaction that my order is in my hands as soon as I pay for it so that the liability transfers from owner to owner.

Have any stores reconsidered shipping and shipping policies?
I would pay for shipping and wait days for product to arrive if the package always came with a full, no explanation necessary, money back guarantee, a paid and addressed return package, and a full refund at the owners request if the store can not provide evidence of receipt. No hassles, easy return, no risk. As I read that Clickz article, it was apparent that while Heidi was explaining the true costs of shipping alternatives, she neglected the cost of (or savings through) reassurance.

Is a promise of a safe and secure delivery more valuable to a customer than free shipping? I’ve done a USA Today quality poll to confirm that I’m not alone in this.

Related Questions

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SaaS (Software as a Service) is a finished product sold directly to users; you log in and use it. Infrastructure as a Service is a capability sold to builders; you embed it into a product so your customers can use it without knowing it's there. The distinction isn't about which company you're buying from; it's about which layer of the stack you're buying. AWS S3 is infrastructure: raw capability you build on top of. Google Sheets is SaaS: a finished product you use directly. One sells to builders. The other sells to users.

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They're looking at the application layer (the products built on top of infrastructure) rather than the infrastructure itself. Infrastructure companies are often invisible to end users by design, which makes them easy to overlook in consumer-oriented market maps. The companies processing trillions in transactions or verifying millions of identities annually don't show up in App Store rankings or product reviews. Their customers are other companies, not people.

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Because infrastructure companies are embedded in workflows, not just used at the surface. Switching costs are dramatically higher; replacing infrastructure means rebuilding the product layer above it. Infrastructure companies also tend to develop regulatory moats, data network effects, and specialized ML capabilities that take years to compound and that no single product company would rationally build from scratch. API-first infrastructure companies command roughly a 25% valuation premium and see meaningfully higher revenue growth than application-layer SaaS.