Does Free Shipping Make You Spend More Money?

Woman hand accepting a delivery of boxes from deliveryman

When companies offer free shipping thresholds, customers definitely pay more to reach those thresholds. Well, maybe you don't, but there's research to show that thresholds do indeed affect how much money customers spend.

The Wharton School reported:

Data from comScore (PDF), a firm that tracks Internet browsing and purchasing behaviour for academic research, documented the impact of the changes. When a $49 purchase triggered free shipping, the average purchase quantity of products per order was 3.31. When the threshold fell to $25, the average purchase quantity dropped to 2.53. The comScore data included 45 purchasers who bought from Amazon.com when both thresholds were in place. Those consumers spent $17 less per "free-shipping" order under the lower threshold, and purchased 1.82 fewer items.

Basically, the higher the shipping threshold, the more crap we're inclined to buy. As Wharton marketing professor David Bell put it, we would rather save $6.99 in shipping than get a discount that saves us $10 overall. Shipping and handling feels like a tax, the price we pay just for shopping. We don't really get anything extra for our money, so if we can skip this cost, we're happy.

Of course, all of this still means you're likely to spend more money overall, even with a low free shipping threshold. It's why companies promote free shipping threshold offers, after all -- they make more money this way. The best way to combat this? Focus on your own bottom line rather than the discount. Look at how much you'll spend, total, with and without the free shipping. Are you spending $35 to get free shipping when you otherwise would have spent just $10? We start to see $35 as a better deal because we get more stuff with it. That might not be the best deal for your budget, though. Comparing these two numbers can help you make a more objective decision.

Sometimes free shipping might be worth it. If you were going to spend $22 on something and shipping costs you $6, it might be worth spending the $3 on something you needed anyway to reach a $25 free shipping threshold. You'll save money and get a new pack of sponges or toilet paper or whatever else you buy. Do the maths, and you can make sure the offers that target you also work in your favour.


Comments

    Free shipping is always worth it, under 3 provisos.

    1) The store has other items for sale that you need or will make sue of
    2) The free shipping option is an appropriate delivery timeframe for you
    3) You can actually afford to spend the money necessary to get to the free shipping threshold.

    Paying for shipping is wasted money when it's available for free. Even if 1 & 3 above can't be met, you can look at finding friends/co-workers/family to also get on board for combined shipping.

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