Nothing is more> annoying than seeing a great online deal upended by high shipping and handling costs. Shoppers abandon almost half of their potential purchases at checkout, and high shipping charges are the number one reason.
In response, stores have stepped up free shipping promotions and formed shipping clubs, which charge an annual fee to cover postage on all your orders, no matter how small. The most recent entrant, ShopRunner, launched last week with an offer of unlimited shipping at a consortium of stores, including Toys "R" Us, The Sports Authority and GNC for $79 per year. And Borders and Barnes & Noble launched clubs earlier this year as part of their store loyalty programs, priced at $25 and $20, respectively.
A break on shipping seems like a welcome respite, but the math works out solidly in favor of the retailers. Stores that offer free shipping -- whether as a regular policy, a prepaid club or a special promotion sell a lower average number of items per order, but consumers come back more often, says David Bell, a professor of marketing at the Wharton School of the University of Pennsylvania. Also, joining a shipping club discourages shoppers from comparison shopping. You re going to go where you ve already got free shipping, says Karen Machleit, a marketing professor at the University of Cincinnati. The psychological effect is that you ll actually spend more with that retailer in the long run, and maybe in the short-term, too, if you re adding filler items to push your order above the free-shipping threshold.
To avoid overspending, three questions to ask yourself before you pay for free shipping:
How much do I really spend there?
Before you sign up, review your online and in-store purchases from the retailer in question -- and its competitors -- over the past year. If there s a convenient store nearby, or if sales and price differences led you to spread recent purchases among several retailers, a shipping club doesn t make sense.
There s also the matter of the shipping charges you re supposedly saving. To get an idea, you could back through your order history on the retailer s site and add up what you paid last year, says Machleit. In general, though, for sites that already offer a low minimum for free shipping, you d have to make lots of small, single-item purchases to recoup the fee. At Amazon.com, you d have to order 27 DVDs with a $2.98 shipping charge per disc, or 16 video games with a $4.98 shipping charge, to cover the site s $79 annual Amazon Prime membership.
What are the other perks?
Club O get a 5% discount on most items. At Borders, a $20 membership also includes 40% off hardcover bestsellers. (Members of the store s free rewards program get 30% off.) And at SmartBargains.com, the $10 Smart Shoppers Club gives members access to new and marked-down merchandise 48 hours in advance. Free shipping on most items is standard as part of all three programs.
But most items does not mean all items. For example, Sears free shipping club which costs $79 and is called ShipVantage -- doesn t cover items that are delivered rather than mailed. That excludes many of the items that are the most expensive to handle, such as mattresses and furniture. Items from third-party sellers, like used books sold via Barnes & Noble, aren t covered, either.
What am I really getting into?
Free trials are common shipping club enticements, but as soon as the period expires, you ll be charged, says Luke Knowles, the founder of free-shipping-focused coupon site FreeShipping.org. Most clubs give you 30 days to ask for a refund. But by signing up, you may also be agreeing to auto-renew they ll keep charging you until you explicitly tell them not to. Check the policy so that you know whether the company will contact you before charging you again in a year, or whether it s up to you to closely monitor your credit card statements.