With the holiday season approaching, many people who don’t usually shop online are going to take advantage of e-commerce sites to save time and money.
And, smart shoppers are likely to use one or more of the many price comparison sites including free listing sites such as Google Product Search and TheFind.com as well as sites that charge merchants to list their products. When you compare prices, make sure that you factor shipping costs into the mix.
Shipping has risen quite a bit over the last couple of years, in part due to fuel costs and fuel surcharges. In addition, some shippers (notably UPS) charge a standard weight for odd-size or large packages.
Because of rising shipping cost, many online retailers continually review shipping options to make sure they offer the best deals to their customers, no matter how they calculate shipping. Others aren’t as careful, and can make it difficult for customers to quickly and easily get accurate shipping rates. This post will explain why and give you tips on what to look for to make sure you get the best deal.
With competition for online stores, actually ALL stores, being so tough these days, some retailers tend to “gild the lily” so that their products appear to have the lowest total cost on price comparison sites.
Here’s an example of why: A decorative solar light may only weigh five pounds, but the package could be large enough for UPS to charge a standard minimum weight of 30 or 40 pounds! Smart merchants look for other options, such as FedEx Ground service or even the US Postal Service for products that fall into this category. Otherwise, the shipping costs are prohibitive and frankly, the product just isn’t profitable.
Does this mean there are no longer online deals? Not at all, especially for “niche products.” Many online retailers can more quickly add new products or change their inventory than most large national stores are able to due to layers of management, contracts etc.
While it’s true that many, but certainly not all big name and “big box” stores, can offer reduced shipping costs due to the sheer quantity of items they ship, others (we won’t name names) offer the same shipping rates as small retailers. And buying from a Big Box or Big Name store does not mean better price.
More importantly, there is a significant advantage of using smaller retailers: with a smaller customer base, each sale is very important. Most small retailers go out of their way to provide quality customer service for each customer, even if a customer ultimately does not make a purchase from their store.
What’s the Difference Between Free and Paid Price Comparison Sites?
Free shopping comparison sites, such as Google Product Search or TheFind.com do not charge merchants to list their products. Others, like PriceGrabber.com or Shopzilla.com charge merchants a fee every time someone clicks on an item in their listings. Many retailers don’t use “pay-per-click” sites sites because “window shoppers” can quickly ring up large bills with no intention of making a purchase.
In general, consumers get a wider selection of products when a free site is used. Keep in mind that you will usually not know if a site charges its merchants or not unless you click on a link that is something like “For Merchants,” “Merchant Log In” etc.
Basics About Shopping Online
Consumers should compare shipping prices carefully, because “estimated shipping costs” often are not accurate. Examples are cited below. Consumers should also look for certain things on an online storefront to make sure it offers secure check-out and does business legitimately. The lowest price is not always the best deal if you buy from a fly-by-night or dishonest merchant.
For more information, please see our article: Tips for Safer Online Shopping for a primer on what all smart online shoppers should know, which points out that along with price, you should shop on secure sites that offer credentials about protection they offer customers.
And, the quality of a site is important. You want a site that is updated regularly, looks professional and appears to have time and money involved in its its design and maintenance. Why? Because if you need to return the item or take advantage of a manufacturer’s warranty, you want to make sure that the online merchant will still be there in one, three or twelve months.
Compare Apples to Apples, not Apples to Basketballs!
Many online stores advertise free shipping. And just as there are no free lunches, there really isn’t free shipping. Free shipping really means that the merchant builds shipping costs into their overhead and into its product prices. Free shipping is used for three primary reasons.
First, it is easier for the merchant because as each order does not time-consuming calculation of shipping costs for each sale. Time can instead be spent on marketing or customer service.
Second, it’s easier for the consumer to compare prices with free shipping as there are no surprises when you check out, or when you get an additional charge long after you make place your order. Read on and find out why.
Finally, free shipping and “flat shipping fees” are far more accurate more convenient when comparing prices. If an online retailer does not offer free shipping or a flat shipping fee, then the actual shipping cost will be tallied and added to your credit card (or PayPal) account hours or even a day or weekend AFTER you place your order.
Be Careful of Estimated Shipping Costs
Sure, when you go to check-out you will get an estimate. But as shown in the screen capture below, it is only an estimate!
Most of the time when you look at a site’s with estimated shipping charges, you won’t see the estimate price until you checkout. And it may or may not be an accurate estimate. Plus, before you even get to the point where you see the total cost including tax and “estimated shipping,” you usually have to create an account with the store. (See note below about why this may be an annoyance, it actually protects legitimate online shoppers.)
It is important to know that the true and final shipping costs can only be determined after a shipper has entered the package into its system. Period. And, the guy four blocks away in a single-family home may be charged less than someone that lives in a condo or an apartment building because multi-family units represent “more work” for the delivery person.
Unless a merchant specifically states that the shipping cost is as stated in checkout, you are likely to get hit with additional charges later. The time between when you place your online order and when you get the final tally (including shipping) depends on when the retailer processes the order and when it is picked up and processed by the shipping company.
Some retailers process all orders at the end of the day. The items themselves may be shipped that day or the following day. So if it is a Friday or a weekend, the true shipping cost may not be available until late in the day on Monday.
Aside: Why Merchants Require Customers to Set Up Accounts
If you haven’t shopped online in a while, you’ll see that more and more merchants require account set-up prior to check-out or to the point where estimated shipping costs to your location are provided. Creating an account with the store can take several minutes and sometimes requires you to enter your payment data whether you ultimately make the purchase or not.
While this may be annoying, it is an key fraud protection measure recommended by payment processors and insurance companies. It lets the merchant spot red flags of fraud, such as a billing address in Illinois and a shipping address in Texas. (Our store policy, for example, is to contact the card holder whenever a shipping address is different from a billing address to make sure the purchase is a gift, and not a fraudulent purchase sent to an untraceable location. There are other red flags the Account Set-up process alerts the merchant to, but this is the most common one.)
Unfortunately, stolen credit cards or credit card numbers often are processed successfully until the card holder becomes aware of the theft and reports it. And far too often, this is not until the next time they try to use the card and can’t find it, or worse, when they read their billing statement.
If the products were delivered, the merchant is responsible for the loss. On the bright side, these precautions measure protect you in the event your credit card or credit card number is ever stolen! By reducing fraud risks, a merchant can offer lower prices and better service to customers.
Real Examples from Google Product Search
Let’s say that are looking for a Solar Lamp and do a Google search to compare prices. You’ll get something that looks like the picture below.
As you can see the prices range from $256.27 to $443.95, and prices are listed with free shipping or “estimated shipping. The lowest price is $256.67 plus an estimated shipping cost of $28.47.
We tested that shipping cost using three different but real addresses, one in New York City, one in Florida and one in California and got the same estimate price for all three. As distance is a factor in shipping costs, we found this surprising. The total of the solar lamp actually came to at least $285.74 for all three addresses, more than many others on the list.
And, as with all products with “estimated shipping,” we received a notice like we would be notified of the final price once the product had been shipped. And if you don’t like the final price, good luck: many sites treat cancellations as returns and can charge up to 20% to cancel the order.
Merchants Know That Time Invested is Key to Purchase Decisions
One thing that all merchants know is that time is important factor and one reason people shop online in the first place. Often, even if a shipping cost is higher than the estimate, many people will continue with the order thinking that all shipping costs are more or less equal, which is just not true!
Another site that we tested shipping prices for on the very same product would not even provide any more information. Instead, they provided us with this form at 5:00pm on a Friday afternoon, meaning an accurate estimate was unlikely before Monday. And, in our opinion, it’s just not a customer friendly way of doing business.
We closed out of that check-out cart immediately and went on to tests other products. The results were pretty much the same. When “estimated shipping costs” or “flat shipping costs” were factored in, prices generally was equal to or more than products listed as having free shipping.
The sites that showed no shipping information had estimated shipping costs that ranged from $9.50 to $20.34. And remember, unless stated otherwise, the shipping is estimated until the product is actually shipped.
Really Sneaky Tricks!
Now, for some REALLY SNEAKY retailers, who either intentionally or unintentionally provide very misleading shipping costs to comparison site. (Screen captures are not included because while truth is a defense for libel/slander, we’d rather not deal with lawyers and the sites are identifiable through screen captures.) A price comparison for one solar light provided the following results:
- Available at Store A for $49.99, “plus shipping” (estimate not provided)
- Available at Store B for $52.99, “estimated shipping $15.00”
- Available at Store C for $68.99, “free shipping”
At first glance, it seems that the best deal is available through Store A. If Store B estimates shipping at $15.00, one can rationally assume that Store A’s shipping cost is pretty much the same. And forget about Store C, why are they charging more and saying “free shipping?” Right now, it really doesn’t seem to be such a good deal compared to the others.
But hold on! This is where you need to take a few extra minutes and do your research. (For the sake of example, let’s assume that none of the sites are required to charge you taxes.)
We visited store A’s website and selected the solar light priced at $49.99 plus shipping. At check-out, the shipping was calculated at $26.00, for a total cost of $75.99. Surprising, but this is often the case.
Next, we went to Store B’s website and ordered the solar light for $52.99 expecting the “estimated shipping cost” to be about $15.00. But, when at check-out, the actual estimated shipping cost was $25: a total cost of $77.99.
This is not uncommon: the store’s comparison listing accurately stated that it was an “estimated shipping” cost. Most sellers do not intend to mislead potential customers, but some take every advantage they can and tend to play fast and loose with estimated shipping costs.
Store B may not have updated their shipping costs recently, could have been unaware of recent fuel or package size surcharges, or estimated that their customer base lived closer to the shipping origin point than the addresses we entered.
Finally, we went to Store C’s website and selected the solar light for $68.99 with “free shipping.” At check-out, the final cost was $68.99, with no potential extra charges later on. So, what originally looked like the most costly product is really the least expensive.
Sneaky or Not? Other Things We Don’t Care For
One of our pet peeves are those stores that advertise “free shipping.” But when once on their site, you quickly see that it’s only free if your purchase exceeds a certain dollar threshold. Many comparison sites are clamping down on this, so you see it far less than in the past, but sometimes merchants can figure out ways to get this in.
We next did a test search of a solar light that listings showed ranged in the $49.99 to $59.99 range. One was listed for $49.99 on the site comparison page with “free shipping.” But, when we went to the site, free shipping only applied if the total order was $100.00 or more.
Another of our pet peeves are stores that say “Free Shipping Today Only!” As a retailer, we check our competitors’ sites and prices regularly. More than a few use this practice: the same products are shown as having “Free Shipping Today Only” every time we visit.
Is this wrong? Depends on how you look at it. On hand, free shipping is free shipping! On the other hand, it is meant to encourage quick purchasing decisions. Our main issue with this gimmick: what other tricks do they use?
Bottom Line: take all shipping estimates with a grain of salt. If you really want to compare apples to apples, look for flat rate or free shipping. Ultimately, it’s up to the consumer to do the extra work and to get the best prices. You need to balance the time it takes to do your homework with what saving you’ll see, because often shipping is a good percentage of the final purchase price.