Why Unconditional Free Shipping Is Bad For Us

A few years back I was standing by the customer service counter at Staples.  A man walked up and handed the employee an empty ink cartridge for a copy machine.  The “customer” said that he bought the product six months previously but had just now opened the package and determined that the cartridge was empty – no ink.  He didn’t present a receipt or any of the packaging material (these big cartridges come packed in boxes with inner seals).  The employee kept the large empty plastic container, asked no questions, and issued the man a voucher for another cartridge.  When the customer walked away the employee must have seen me roll my eyes.  He volunteered that although he did not believe the man’s story, he did what Staples policy required.  “You see” he said, “that’s Office Depots policy and we have to compete.”

Last week I was at an Internet marketing conference at Google’s Silicon Valley campus.  One of the speakers was a VP who leads the worldwide ecommerce operations of a large corporation that did a billion dollars in revenue in 2008.  After the conference, we sat next to each other on the shuttle to the airport.  The topic turned to free shipping.  He told this story: his 14-year old daughter bought and returned 20 pairs of soccer shoes from Zappos.com before finally keeping a pair.  For those of you who may not know, Zappos is a well-known ecommerce shoe retailer whose marketing strategy has centered on their policy of free shipping and free returns.

I don’t know if Zappos is making money these days (I doubt they did on the soccer shoes customer), but I do know that they were not profitable in their early years and this past November they laid-off 8% of their people.  But whether or not this shipping strategy is sustainable is not my central point.  Zappos is not serving the public good.  Neither is Staples or Office Depot (if that return policy is still in place). Our society needs its people to take a measure of responsibility when an individual enters into a transaction with a merchant.  When people are allowed to behave with impunity in the marketplace, we all eventually pay.  [Think current economic crisis.]

I first saw this problem coming with Nordstrom.  What buzz was created with their take-it-back-no-questions-asked policy.  People competed to out-do each other with their “Who-screwed-Nordstrom-worse-and-Nordstrom-didn’t-care” stories.   It became a kind of shopping joke, while at the same time apparently, a successful marketing strategy for Nordstrom.  For small merchants, this was not a joke.  It was a problem on a par with Wal-Mart opening a store on the outskirts of a small town.  Historically, the fundamental goal for a merchant was to nurture a good relationship with a customer [not unlike a community’s banks].  Nobody was out to cheat anybody: merchants needed customers and people needed stores.  Each side took his/her respective responsibility in the trade.  To lose this nexus means losing a measure of our collective and personal values; unraveling a bit of our social fabric.  Big corporations, not operating on a human scale, “train” customers (like the innocent 14-year old) that our marketplace is neutral on the subject of responsibility in the transaction (the data from computer modeling informs these businesses that these policies can generate more profit given certain assumptions and time frames irrespective of specific transactions).  But for smaller merchants with fairly priced merchandise, unconditional free shipping is unsustainable; human scale and time don’t allow it.

“So what”, you may say.  If you can’t compete, try a monastery or a cave (or go to work for a big corporation).  But it’s not that simple.  Policies like “unconditional free shipping” or “return merchandise with no questions asked” are a bubble (or a deception).  And we have all become experts on the fate of bubbles.   As I am implying, I believe this is not unrelated to all the bad business practices that we all have become aware of and that have gotten us into this current economic mess.  Like lenders loaning us money for homes we couldn’t afford, or credit card companies sending us cards so that we’d go into debt and pay onerous interest rates and fees, this is ultimately (whether intended or not) just another way to dupe us.   

The best merchants on or off line are gimmick free, not shipping free.  I suggest supporting them rather than a business that, because it absolves the customer from acting responsibly, may be both sealing its own fate while simultaneously bringing down its betters.  But the overarching problem is worse-the erosion of our commonweal. 

Fred Belinsky

The Village Hat Shop

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I'm all for people being pushed to take personal responsibility. America is sorely lacking in that department as of late. However, I don't think it's a bad thing for merchants to easily accept returns or have no-questions-asked policies. It's their prerogative as part of their overall marketing plan. If it works for them, everyone else needs to adapt.

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Free shipping certainly does grab peoples attention. A great marketing strategy.

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