The rise of free shipping: 8 moments that transformed e-commerce
The is a behavioral economics theory that refers to the negative emotions humans feel when making a purchase. Humans are a loss-averse species and we react more strongly to losses than we do to equal wins or gains. So, while some purchases hurt more than others, spending money will, on some level, always inflict a bit of psychological pain.
This is the reason so many consumers abandon their shopping carts at checkout鈥攐nline, anyway. Extra fees like taxes and shipping costs added to online purchases make an already painful transaction that much tougher to swallow. Many companies, starting with Amazon, have figured out that offering free shipping is an effective way to offset the pain of paying and usher consumers down the last levels of the.
Consumers have come to expect perks like free or fast shipping鈥攂oth, ideally. Without the guarantee of either, people are unlikely to complete a purchase. And with free shipping came the advent of free returns, and then refunds without returns. These expectations and efforts to mitigate the pain of paying have made us, on the whole, more irrational and wasteful consumers. When we are more inclined to buy because of a perceived no-cost service, we are wasteful at every step along the supply chain.
The coronavirus pandemic exacerbated inefficiencies along the supply chain and reinforced bad consumer habits. Practices like bracketing鈥攂uying multiple of the same item like pants and returning the unwanted items鈥攚ouldn鈥檛 be so terrible if the supply chain were designed to function in reverse. However, it is woefully ill-equipped to efficiently process returns.
According to Optoro, a reverse logistics company, roughly 鈥攏ot restocked on shelves. With an estimated record in 2021鈥攂oth online and in stores鈥攖he environmental impacts of incentivized buying and returning are likely to worsen.
To track how corporate practices and consumer behaviors have changed over time, compiled a list of eight important moments and trends in free shipping in the internet age.
