Book Depository and the Psychology of Free Shipping

Would I still get my books from Book Depository if they stopped offering free worldwide shipping? I suppose the answer is, “It depends.”

Because I spent many years reading pirated novels on a Kindle, I never used to think about where to get good prices for books. But it’s true that you retain less information with an e-reader. During this time, I couldn’t recommend a novel without struggling to recall the title and author. Plus I missed what it felt like to turn a page with my fingers.

So after moving to Singapore, I started rebuilding my physical library, one book at a time. I’ve been doing it very slowly because books, like alcohol, cost more than I’m comfortable paying. It’s a shame, because the huge Kinokuniya at Orchard is a lovely place to lose yourself in (but only on weekday nights, when children and tourists are somewhere else).  

Where does one find affordable books in the most expensive city on earth? Buying them online is the obvious answer, but the price difference isn’t all that great with shipping costs factored in.

Shipping Costs Make Shoppers Abandon Their Carts

I can’t remember how many times I’ve ditched my cart after watching my order total rise after shipping. And I’m certainly not the only one. According to a survey by UPS, 7 out of 10 online shoppers in Singapore are more likely to buy from a merchant if they offer free shipping. Unlike most shoppers, however, I do not go to great lengths to get free shipping.

For instance, Amazon ships free to Singapore, but only if you have a minimum purchase of $125. I don’t need $125 worth of books or random stuff all at once. And with shipping factored in, buying just one to two titles increases the total order cost by 75% to 100%. I might as well get them here and avoid the wait.

Then I discovered Book Depository and never looked back. This UK-based online bookstore has one of the most punchy customer promises I’ve ever encountered: millions of books with free delivery worldwide. They had me at “free delivery”, but unlike Amazon, you’re not required to make a minimum purchase. This means I can buy one new book every week guilt-free (which I’ve been doing since my first purchase).

Photo source: Everlane

Free Shipping is a Better Deal Than Discounts

If I reflect upon the promotions that influence my buying decisions, free shipping usually seals the deal. This is particularly true if I use a third-party shipping agent for overseas merchants that don’t ship to Singapore. You save a lot more from free shipping than discounts.

Case in point: I’ve been wanting Everlane’s Modern Point flats for ages ($155). Because Everlane doesn’t ship Singapore, I need use a shipping agent called Comgateway, which costs anywhere from $21 (standard shipping) to $29 (express shipping). Even if the flats went on sale at 20% off (a discount of $31), the additional shipping costs will only net a savings of $2 – $10.

So unless the shoes go on sale for 40% – 50% off, discounts alone won’t make me want to buy. (It’d also tarnish their premium branding if Everlane offered discounts this steep!)

Then Everlane offered free international shipping for a week. I wasn’t really planning to buy new shoes, but the savings were just too damn good to pass up. So I bought the shoes and saved me some money. (Then I regretted buying the shoes, because the size I got was too small and I couldn’t be bothered sending them back. Did I save money or did I just waste it? First world problems.)

The same math holds true for books. As I mentioned earlier, shipping costs nearly just as much as a paperback. Unless the book is heavily discounted at 50% off, free shipping still saves me more money than a sale.

Free Shipping Only Works When You’re Ready to Buy Something

Fortunately for us consumers, we don’t always fall under the spell of free shipping, even though they’re everywhere. It only works its magic when you’re at the right stage of the buying cycle – that is, when you’ve decided to buy the item even without a free shipping offer.

This is why I keep returning to Book Depository over and over again. Once I know which book I want, and I can wait a couple of weeks for it to arrive, then it’s a simple matter of acquiring it for the lowest price. All other things being equal, shipping costs (or the lack thereof) tip the scale in favor of buying from Book Depository versus buying from Amazon* or buying locally.

Free Shipping Isn’t Actually Free

Thanks to big online retailers, online shoppers are primed to expect free shipping when they spend above a certain threshold. But like most things that are “free”, free shipping isn’t entirely without cost, both for consumers and retailers.

For the longest time, I assumed that shipping costs were neatly folded into the product prices. But because many ecommerce companies use dynamic pricing (a practice where prices change depending on factors like supply and demand), it’s not realistic to make shipping part of their pricing strategy today. 

Still, someone needs to pay for shipping, and that someone is usually the retailer. But as Fast Company rightly points out, free shipping eats at profits and makes businesses bleed money. Even Amazon, the purveyor of free shipping, chalked up a net loss of $7.2 billion when they offered 50 million more items for free 2-day shipping in 2016. Meanwhile, large retailers like Macy’s and Target are struggling to find the right balance between customer satisfaction and making their fulfillment channels profitable.

As for ecommerce startups and small retailers, they get their free shipping money from investors. Otherwise, this isn’t something they can afford to offer. I don’t have any numbers that show what percentage of investor money goes into paying for free shipping (if anyone can share, I’d really appreciate it). But looking at how much money Lazada lost before they got funding from Alibaba, it’s safe to assume that a good chunk of their budget went to funding discounts and shipping.

In the Long Run, Free Shipping Can Hurt Consumers Too

It’s a bummer to imagine online shopping without free shipping. There’s no bigger buzzkill than going through the whole checkout process, only to find out that you have to pay an extra $10 on top. Customers don’t perceive shipping as added value. It’s an unavoidable part of online shopping, and having to pay for it feels like you’re getting a bad deal (as if waiting days or weeks for your package isn’t annoying enough).

But after looking at how ecommerce giants struggle to turn a profit from free shipping (and other marketing/operational costs), you have to wonder if this is good for anyone in the long run. If small startups and retailers burn their funding on free shipping and fail to become profitable, consumers lose too, by having fewer options in the market.

I don’t have an easy answer for ecommerce’s free shipping problem, other than for industry leaders to somehow make consumers change their attitudes towards shipping costs. But this is going to be tough. As a customer, I love getting free shipping. I’ve been guilty of buying an extra item or two just to qualify for it. And new players in the ecommerce game have no choice but to offer free shipping to acquire their first wave of customers.

If Book Depository stopped offering free shipping, would I still keep coming back? I suppose the answer is, “it depends”. All things being equal, it becomes a simple matter of finding the retailer with the lowest shipping rate. For now, I continue to buy my weekly book with reckless abandon, thanks to investor-funded shipping.

* Whether I buy from Book Depository or Amazon, my money ends up going to Jeff Bezos anyway.

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