Good Question: Is Free Shipping Really Free?
MINNEAPOLIS (WCCO) - With $61 billion of our online dollars up for grabs this holiday, many more retailers are offering free shipping this season.
Just before Thanksgiving, Target announced it would offer free shipping, calling it a "great investment" for the company.
What used to be considered a perk has become something of an expectation.
But, is free shipping really free? Good Question.
"Retailers know that if they offer free shipping, people are tending to load their carts up," said Doug Berg, CEO of TrackIf, an app that tracks prices online. "They're not dumb, they understand human psychology."
According to Berg, the average order size with free shipping is $124. It drops to $91 when customers are charged to ship. A study by comScore.com found that 58 percent of people will add more to their carts to meet the minimum for shopping.
"You're so close, it's almost like a game at that point," said one online shopper, who says she's thrown a few extra items in her cart.
Retailers also know high shipping costs can end an online sale. Comscore.com found it's the No. 1 reason people (58 percent) will abandon their carts.
Retailers do get special rates from UPS, Fedex and USPS, but it still costs them money to ship.
"They know to build those shipping costs into the margin of their products," Berg said.
