How does free shipping work?
Many large online stores offer it: Free shipping and on top of that free returns too! Sounds great, but is this true and how does it come about?
Webshops have very few areas in which they can compete. Product price, service….. And what else? This challenge to stand out has meant that online stores often make the same changes as their competitors. But is free really free?
Even very large webshops have to pay their shipping partner our courier for sending a package. Payment must also be made for the return package in the event of a return. These rates are lower than they will be for you at the post office due to the high volumes they ship, so that’s part of the reason major online stores can offer free shipping.
Many large web shops would rather take a loss on a single order from you as a customer and hope that you will come back again because of the good experience and the free shipping than that they lose you! That is also the biggest difference with smaller web stores that often charge shipping costs, it is not feasible for smaller companies to make a significant loss on an order.
Free shipping and free returns are really free for you as consumers, but the costs for the service of receiving a package at home have not disappeared. Why smaller webshops still charge you shipping costs and do not always pay for your return is clear in the example below.
Calculation example:
At a webshop you buy a nice sweater for 25 euros including shipping costs of 4 euros, on which the webshop makes a profit of 10 euros. +10
In the warehouse, an employee has to find the product, he/she uses a box and filling material, closes this box with tape and sticks a printed label on it. This costs a total of 2 euros. +8
Then of course you want to have this box delivered to your home. This webshop pays 6 euros to a courier for this. +2
So a total of 2 euros remains for the company where you bought the sweater. A small margin, but what if this sweater had been sent for free? Then we have to deduct the 4 euros paid shipping costs from the 2 euros profit, which causes a loss. -2
In the case that you do not like the sweater and want to return it, even more costs will be incurred. Fortunately, the webshop offers you free returns, but they pay the returning courier 6 euros for the return. -8
