Feb. 2 2011 02:17 PM

I ordered at least a dozen products from catalogers and eTailers this holiday season and didn’t pay shipping charges for any of them. The merchants included LL Bean, Levi, Neiman Marcus, Target, Amazon, Macys, OverStock, Skin Store and Radio Shack. Most of the products were also at discounted prices. Additionally, I didn’t have to pay sales tax on those with no locations in Texas. I think you will agree this equals a good deal for consumers and helps the environment by keeping our cars off the road. It has been reported that 52% of online retailers have offered free shipping in some way.

Is this growing phenomenon good for all of the parties, especially the merchant shippers and transportation carriers?
Luke Knowles, Founder and CEO of Free Shipping, told me, “This is a terrific volume-increasing situation for carriers and shippers. The service offering in the USA is so well-organized by carriers that by promoting FreeShippingDay.com on Friday December 17, the participating merchants have moved up from 250 in ’08 to 750 in ’09 to 1500 in ’10. This allows customers to shop later online and for shippers and carriers to gain more business. Our revenue model is to receive a commission from our affiliate merchants.”

In the early ‘90s, when delivering residential packages, carriers had to get a written signature on every package from the resident, a willing neighbor or retry the delivery again (adding to cost). Signatures are generally not required these days. Greater volumes and less time involved both reduce the delivery cost. Additionally, the USPS has work share programs where a carrier picks up and the USPS delivers, further reducing cost for some packages.

The Public Relations Rep for the Postal Service, Dave Lewin, told me, “We are pleased with the growth of merchants offering customers free shipping, since our products are well positioned in the B2C marketplace in terms of price and our overall value proposition. Given our unique ability to reach every address and household in the country, we feel this is a positive trend in the B2C segment that will result in additional package volumes for the Postal Service.” 

Siva Kumar is Founder and CEO of TheFind.com, which was started six years ago. Their site compares exact product pricing online and is in the top tier of shopping sites. “Online is currently only six percent of all retail, and our main use is to help consumers get more information.” He suggests the consumer can use this to negotiate at the retail level for free warranty, lower price, free installation or delivery. Kumar told me the WSJ had a recent front page article on his company talking about a consumer who was in a store, scanned the barcode with his smart phone, found the exact same item at Amazon without tax or shipping fee along with a 30% discount and he ordered it from his mobile while still in the store. TheFind has been profitable for eight straight quarters, has mobile applications (which are currently only 10% of overall online purchases) and is currently available only in the US and UK. They make money through affiliate commissions from about 30% of its merchants. This is competition at a whole new level.

Several Things Are Absolute
1. Free shipping is very popular and is being paid by customers in some form or other
2. Parcel volumes for the 2010 holiday peak season from shippers have set all time records
3. The major carriers increased rates in January, just like they do every year

Rob Shirley is CEO of ExpresShip, Inc. a strategic business developer in the global supply chain. Contact him at rob@xpship.com