The Checkout

When Free Shipping May Not Be Free

Anyone obsessed with shoes (and that's almost every woman I know) says there are two sure places to find and buy shoes: Nordstrom, of course, and Zappos, an online Web site with a huge selection and promises of free shipping and returns.

It was that free-shipping promise that prompted me to turn to Zappos after a disappointing outing at Nordstrom. First I encountered a couple of rude clerks (at Nordstrom!?); then I learned the store didn't have the right size in stock. A clerk finally found the right size at another store but said it would cost me $5 to have them shipped to my home. Forget it. I'd go to Zappos, where shipping is free.

Or so I thought--until I went to order the funky red shoes. That's when I discovered that Zappos's retail price was $5 more than Nordstrom's. Intrigued, I compared some other shoes as well and found that in several cases Zappos charged $3 to $4 more for shoes than Nordstrom's online site. Of course, by the time I added Nordstrom's $5 shipping fee, I usually always came out ahead at Zappos. But it was the principle: Zappos said it didn't charge extra for shipping but that cost seemed to be added to the base price. So was it really "free shipping?" Shouldn't Zappos just say "shipping included" when the price was listed?

I asked Zappos and here's the response from the company's chief executive, Tony Hsieh:

"1) Our average shipping cost is actually about $10, and we're definitely not marking up shoes above msrp [manufacturer's suggested retail price] by that amount.

2) Our focus as a company is to provide the very best service possible. We want our customers to buy from us because of service, not price, so depending on the specific item you choose, we may occasionally be a few dollars above msrp. The vast majority of the products that we sell are not as high as $5 above msrp. However, there are certain classes of items where we need the additional margin in order to provide as wide a selection for our customers (such as kids' shoes or lower-priced shoes) and for us to still break even on those sales (or even lose a little money). We actually don't make any money on those sales, but we see it as a service to our customers. We can either not offer those shoes at all or offer them to our customers for $5 above msrp (and break even on the sale), and we chose the latter.

3) Free shipping and free return shipping are really just that -- the service is free. It's more consumer friendly than charging $5 less for the product and then a separate $5 charge for shipping, because if they return it, there's no cost to the consumer, whereas on almost all Web sites that do charge shipping, you do not get your original shipping cost refunded if you return the item. This may seem like a small point, but it actually costs us quite a bit more to do it this way....

4) We have a 110% price protection guarantee, so if an in-stock product is found at a lower price at another Web site or brick and mortar store, we will lower our price by 110% of the difference."

Markup or not, at least you know, when you order shoes from Zappos, what the final price will be when you click a pair into your shopping cart. While I was researching this item and checking out prices at other Web sites, I found that you often had to create a password, enter your name, e-mail address, etc. before you could find out how much shipping would cost. That's very time-consuming and annoying, especially when you discover that shipping fees are so high that the online "deal" is not such a great bargain.

P.S. I just got an e-mail from Nordstrom. They're having an online shoe sale. Shipping is free!

By  |  March 10, 2006; 7:01 AM ET Customer Service
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Comments

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shoes.com has free shipping & lower prices than Zappos, but the selecton isn't as large

Posted by: Faith | March 10, 2006 8:33 AM

The next question is, obviously, How is the Manufacturer's Suggested Retail Price determined? Does the msrp take into account such things as shipping and sales promotions? The msrp has seemed a little bit hokey.

Posted by: Warren Gillam | March 10, 2006 8:39 AM

As long as the final price can be determined up front, I'm happy. What I don't like is websites that don't tell you the shipping cost for an item until you've entered the ordering process.

Posted by: William | March 10, 2006 9:02 AM

I buy from Zappos (which has excellent customer service, by the way). They say on the Web site that the price of shipping is included in the price of the shoe.

Posted by: Anonymous | March 10, 2006 9:02 AM

The cost of shipping & "Handling" sometimes make me angry. And the fact that on many sites, you have to almost come to the last click before you place the order to find this amount.

Both at Buy.Com and ComputerGeeks, I have cancelled the order when I found out the cost of S&H.

eCost.Com used to provide free shipping on all >$25 orders. Now they charge $2 on all orders. Plus a $6.50 "handling" fee. I feel like telling them not to "handle" the stuff I purchase.

One could say they have this cost, and it ought to be reflected in their system. I say no. There are many costs in doing business, and they don't all get charged individually on the invoice. The cost of doing business ought to be reflected in the markup they include on each item.

Shipping per se is different. The cost depends on how far the stuff has to go.

But eCost's shipping is $1.99, no matter if it is next door, or coast-to-coast; which implies that they are really including the shipping charge un their selling price, to a large extent.

Posted by: Krishna | March 10, 2006 9:36 AM

It's interesting and frustrating to read how people think shipping charges are high. I own a retail business that ships items all the time. Shipping is very expensive to retailers and will be getting only more so as fuel prices continue to rise.
During the rise of on-line retailing, when companies were flush with investor cash and didn't worry about making a profit, they came up with free shipping as a way of buying market share. Consumers got used to this and came to think of shipping as something they should get for free.
It's anything but free: in our business somewhere between 10% and 20% of the retail price is the cost of getting the item to us from somewhere in the world. Then if you want it shipped to your door, it costs more. There's no way around it, moving real goods around the country costs money, so whether shipping is included in the cost of the product or added on as a separate charge, it's very real and it's only going to increase.
For years, major catalog and on-line retailers have subsidized the cost of shipping with high margins on the product itself, so you're paying for shipping one way or another.
Think of how much it costs to fill up your car with gas; every product travels on a truck with much larger fuel tanks that need to be filled. Somebody has to pay for that fuel. To think of free shipping as some sort of entitlement defies logic and reality.

Posted by: jrw | March 10, 2006 10:00 AM

I have shopped at Zappos a number of times and each time found the experience to far exceed my expectations. I mean, come on, free shipping and free returns? If you buy shoes, decide they're not for you, and return them --- Zappos simply eats the shipping cost --- from your article, it sounds like $10.. What other company has ever offered this sort of service? I know that I am willing to pay extra for better, more efficient service. Plus, it saves me from having to make a trip to the mall and stand in lines. To me, 2 hours of my time is worth more than $5 in savings.

Posted by: Brian | March 10, 2006 10:11 AM

jrw, a retail business owner says that shipping costs are high, and are getting higher. Agreed. The question here is to make them transparent, so one could make an informed decision, early in the ordering process, and not put the customer through multiple screens demanding a whole lot of information before divulging this cost.

and as to "Think of how much it costs to fill up your car with gas; every product travels on a truck with much larger fuel tanks that need to be filled." - misleading!.

While the trucks have huge tanks to be filled, they also carry tremendous amount of stuff at a time, and I am almost sure that the cost per mile, for the amount of weight carried, is far cheaper than in a personal situation.

Posted by: Krishna | March 10, 2006 10:17 AM

What made me a Zappos convert is free returns. With shoes (especially athletic shoes) being made all over the globe now, consistency in sizing has become a real problem. Knowing that shoes can be returned free of charge allows me to buy with much greater confidence.

Posted by: Jack Purdy | March 10, 2006 11:00 AM

Krishna...good point about posting shipping costs where they can be seen before going through the checkout process; that's only fair and reasonable.
I didn't mean to be misleading with an analogy between personal vehicles and freight trucks. I was attempting, apparently not very well, to use a commonly-understand situation (paying for gas) to illustrate how fuel costs affect the cost of goods. I didn't mean to equate operating costs between cars and trucks.

Posted by: jrw | March 10, 2006 11:35 AM

I've noticed the $5 markup on Zappo's site when pricing Birkenstocks, but I do think their selection and service more than make up for it. And I like that I know the total price without having to go all the way through registering and ordering steps before knowing what the shipping is going to cost.

As for handlings fees, I had a makeup company charge me $6.50 for a "free sample" that was shipped in a regular envelope. Total ripoff!

Posted by: ML | March 10, 2006 11:54 AM

Zappos is good, but I really love Solestruck.com as they have free shipping and returns and a boutique feel with great service in my experience.

Free shipping should be included in the shopping experience, just like Nordstrom gives you a bag for your clothes without charging extra for the bag that obviously costs Nordstrom some money.

Besides, I know there are cheap places to shop but quality companies that offer great products and services will get my business even if it "costs" a little more than digging through piles of cheap products, standing in lines waiting for poor service, or being cheated by companies that dont offer exchanges but only in store credit.

Posted by: Shannon | March 10, 2006 12:54 PM

It's called NORDSTROM, honey, not Nordstrom's. No wonder the clerks were rude to you. Going to Home Depot's for some supplies this weekend?

Posted by: RJL | March 10, 2006 1:37 PM

I recently had my first Zappos experience... Loved it... Factor in that there is no sales tax and that can be a $5-$10 savings on a $100 pair of shoes compared to Nordstrom. When the shoes were too big (even after wearing them for a half day), the return and credit were simple and prompt! The second pair fit right on.

Posted by: DW | March 10, 2006 1:49 PM

I have found it better to use online malls like bannershopmall.com for shopping. It is a lot easier to comparison shop on shipping and special sales.

Posted by: kendra | March 10, 2006 1:58 PM

Hands down Zappos has the best customer service of all. Please rant on companies that deserve it. Nordstrom doesn't even come close to seleciton or customer service.

Posted by: Anonymous | March 10, 2006 4:04 PM

Rude clerks are the norm at Nordstrom on Democracy Blvd.

Posted by: Anonymous | March 10, 2006 4:38 PM

Honestly, I don't think Caroline Mayer did enough research before she wrote her article. She sounds kind of like the Peter Fallow (Bonfire of the Vanities) of the Washington Post!

Posted by: Brian | March 10, 2006 6:31 PM

Why are you whining about $3 or $4? YOU SHOP AT NORDSTROMS!!!!

Posted by: Rich | March 10, 2006 8:46 PM

Shoebuy.com is Zappos' closest competitor and they actually have a larger selection of shoes (I believe the latest number is around 400,000!), and offer the same 110% guarantee, free shipping and free return shipping. Ok, so you won't find Gucci or Vera Wang, but if you want department store brands like Franco Sarto or Via Spiga, they have them. And, I've found the prices at Shoebuy to be slightly less than Zappos (on average).

Posted by: krs | March 13, 2006 9:35 AM

You lost me at "Anyone obsessed with shoes (and that's almost every woman I know)..."

REALLY? Hardly any women I know are obsessed with shoes. I know some women (mostly fairly young) who enjoy them, but obsessed is a pretty strong word. And I know a lot of women who buy functional shoes and get on with their lives, just like (you would probably say) most men.

Sometimes the "cutesy" lead-in is a turnoff.

Posted by: Midwest | March 13, 2006 10:55 AM

Usually when I buy shoes online it's because I've totally given up on finding them in any brick and mortar store. By that time I've become so crazed that I might not find the perfect pair of --insert shoe type here-- that considerations of price and shipping costs have gone completely out the window.

DSW is still the best, plus there's the thrill of discovery of a pair of green Prada pumps on the 80% off clearance rack in just your size.

Posted by: alex | March 13, 2006 2:57 PM

I'm guessing you had a deadline and nohing to write about. Don't fret, it happens to the best of us.
How is this bad? Your choices seem to be 1) pay a clearly advertised price for shoes that will be sent to you
or
2) pay a clearly advertised price for the shoes and an additional fee to actually receive them.
You've not been misled. Would you prefer the shoes be free and the S&H exorbitant?

Posted by: shoe-luva | March 13, 2006 7:32 PM

I thought it was fairly obvious that most places that advertise "free shipping" find a way to get the money out of you one way or another. The U.S. Postal Service, UPS, and Fedex are not offering their services for free, so someone (the customer, whether that is spelled out for them or not) has to make up the difference. I have always noticed that Zappos consistently charges $10-$20 more than the Web sites of individual shoe manufacturers or other vendors. If you know exactly what pair of shoes you want and already know they fit, you can frequently find them cheaper elsewhere, but if you are buying blind then the markup is probably worth it on Zappos for the convenience and selection.

Another place that advertises "free shipping" but makes up for it in prices is FerretStore.com, which sells pet supplies. They have free shipping for orders over $35 -- which is easy to reach because their items are almost 50% more expensive than other online stores that charge for shipping, or direct from the manufacturer. You very rarely get something for nothing...

Posted by: ko | March 14, 2006 11:52 AM

All I know is, the one time I ordered from Zappos, I got the shoes IMMEDIATELY. As in, the next day. And I didn't pay for expedited shipping either--I still don't know how they did it. I haven't ordered from them since, but I'm not really a shoe fiend either--but when I do, I'm going there.

Posted by: Cee | March 14, 2006 7:02 PM

Honestly, I don't see why people get so upset about the Handling fees. The companies have to buy materials to ship your item in. That costs them money. They also have to pay people to pack everything up all nice to ship it to you. That also costs money.
Yes, it sucks to pay about 10 dollars more for that, but remember you are paying for convienance of having it shipped and not having to waste gas and time going to a store and shopping for whatever it is.
If you wait until you need a few pairs of shoes, or get a friend to order in with you, the fees become even more managable.
It's really not that hard.

Posted by: Melissa | May 12, 2006 2:22 AM

Zappos customer service sucks.
I ordered 2 pair of shoes that i try pricematching from another site and their rep said they try contacting the other retailer and was not able to get thru, while i placed their rep on hold and easily verify the availablity and they lied that they would return my call but never did. The next day I contacted them again to rectify the problem and they lied that the rep left a message but their were no record of it and they still refused to price match the item and after requesting to cancel the order, they went ahead and shipped my item anyway, what great service even after i requested to cancel the order.
Now i have to go thru the hassel of return the shoes to them.

Posted by: Anonymous | July 17, 2006 10:18 PM

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