On Cyber Monday, Is Free Shipping Really ‘Free’?

On the show this morning Riley & I kicked around a piece from The Atlantic, titled "There's No Such Thing As Free Shipping". Seeing as though it's "Cyber Monday" and you're likely seeing Free Shipping offers all over the internet, you might not believe this is true.

The major point of the article is that someone, somewhere is paying the price to get the item from a warehouse to your door:

...[C]ustomers really love free shipping. Like free appetizers at a restaurant, it's likely that the cost of free shipping is either baked into the prices of the products, or it's part of a retailer's strategy to increase a customer's order size. Knowing the biases of the customer base, and how good free shipping makes them feel, increasing product prices by a small, unnoticeable amount seems to be the win-win strategy for both customers and retailers.

That really shouldn't mean much to you, the consumer. If you're simply searching for the lowest price possible, having the shipping costs baked into the bottom line actually helps. You won't be surprised by a massive shipping/handling fee as you're checking out.

Meanwhile, there is a pending lawsuit that accuses Amazon of doing just that -- encouraging sellers to bake the shipping costs into the price even for Prime items:

In what she hopes will be certified as a class-action lawsuit, Burke accuses Amazon of encouraging third-party vendors to increase their prices to Prime members by the amount they charged others for shipping, without revealing that a portion of those alleged "inflated" prices was for shipping fees, the lawsuit claims.

"For example, if the price of an item is advertised for $10 with $3.99 shipping and the [vendor] wishes to match or top their price, the [vendor] would charge $13.99 or higher," Burke alleges in the suit.

No word at this time on where the litigation stands or if it will become a class action suit.