“As exciting as e-commerce is, it’s still a bricks-and-mortar world when it comes to the average American shopper. So some of the most powerful lures in online retailing these days focus on cheap shipping.
“Fixed shipping fees make the purchasing decision cleaner for consumers,” says Matt Rutledge, CEO of Woot Inc., a Carrollton, Texas e-tailer of consumer electronics and other gear. “For them, you’ve got to make it akin to driving out to buy something at the store. It’s neat and clean.
“The further away that you can tuck shipping distastefulness from the online-buying experience, the better.”
That bit of psychology explains the popularity of e-tail icon Amazon.com’s flat-fee Prime shipping service, launched in 2005. For $79 a year, members get unlimited, free two-day shipping with no minimum purchase.
The times, they have a-changed
Once upon a time, not very long ago, e-tailers thought way differently about shipping fees. Many sites showed their high shipping fees only near the end of a transaction — a margin-enhancing “gotcha” — to make up for one of the high costs of selling on the Web. But savvy consumers who spent a little time comparing prices often found that shipping fees wiped out the “deal” they thought they were getting.
Today, the Web is still a low-margin environment, but Prime, among other models, was a response to higher consumer awareness of — even preoccupation with — stiff and often padded shipping charges.
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