Last year, my boyfriend wanted go to Best Buy on Black Friday to get a Blu-ray player for our apartment. I told him he was crazy, but let him go because a) I did really want a Blu-ray player for our apartment and b) some people need to learn the hard way. This Black Friday, we stayed home and watched Highlander, biding our time until Cyber Monday. After all, why leave home when there’s free shipping?
Shopping online can be such a crapshoot, to the point where—now that I’m a seasoned online shopper with 10 years of experience—I rarely buy from online stores that charge shipping for purchase or returns. After too many pairs of shoes that didn’t fit, and products that looked nothing like what was advertised—it’s mentally hard to pay for shipping when there’s a high chance you’ll return it.
But I should know better, as all economists (and shoppers) should know: There’s no such thing as free … shipping.
The Wall Street Journal reported that Amazon spent more than $6 billion on shipping last year. Retailers including Amazon, Best Buy, and Gap have all raised free-shipping minimums, not just because of the higher cost of shipping, but because it encourages shoppers to buy more. And from a game-theory perspective, that makes sense: Why pay the shipping fee when another $10 would get you free shipping and a pair of shorts? A cognitive bias called “anchoring” might also be to blame, as we still regard a shipping fee as the norm—free shipping seems like a discount in our mental calculations.