How likely are you to buy something just because it’s “free shipping”! People buy what they need or want irrespective. Conversely, if shipping is going to cost 10% of their bill on a sale online, they will not say it’s too expensive and drop the purchase. Same way, in our daily lives, if delivery of a package is free, it is good dopamine. People are not buying clothes or food because they can get free delivery but because they need or want whatever is on order. Its marketing strategy of many companies to undermine supply chain for the sake of consumer appeasement. How did we get there?
If delivery is actually free then how are there so many delivery start-ups which are achieving success? If Shipping (or Logistics) is free, then why do commodities cost so much more in the place where they are needed? Or some commodities become unviable due to logistics cost? A secret for you to keep is – there is no such thing as free shipping or free delivery. It is how a cost is structured and allocated on landing the commodity or package. Funny enough – Everyone knows this as a consumer. Still, they are expected to fall for the appeasement.
I can imagine how the poor delivery guy feels when customer is told that he does not have to pay for the delivery. Being involved in Shipping for more than 30 years, it is abusive language to my years if anyone says “free shipping”. The freight is of course negotiated throughout a contract. The few good companies are able to make better margins due to cost leadership. It is unfortunate enough that there are several variables in Shipping that are never covered well with any arrangement. Shipping (as well as Logistics) has abundance of risk, regulation, and refraction.
Think about it. A hospital or a doctor is expected to charge more if they have a reputation of being good. A law firm or lawyer is expected to charge more if they have a great record. A sportsman or a sports club becomes valuable basis their performance. A shipping company or ship owner is expected to charge lesser than competition if he has a good reputation, great record and proven performance. In fact, the reputation, record and performance are measured with how much they charge! Shipping and Logistics, with their internal competition have thus let businesses undermine the role of supply chain in daily life.
– Capt Pappu Shastry/ CEO – ASL
