One point that was mentioned several times at eTail’s recent Multi-Channel event was the importance of consistent pricing across channels — how important it is to give customers a uniform pricing experience. Thinking about this, however, in terms of shipping costs on the web (a problem that continues to exist for eRetailers — hence the plethora of creative “free shipping” offers), I realized that if the additional shipping cost is considered to be part of the total cost, pricing an item consistenly in-store and online actually does NOT keep said cost consistent across all channels.
I would be interested in an analysis of the cost of running a web store versus a brick and mortar — a web store must be cheaper, right? The transaction cost itself on the web (or any automated ordering platform) is signficantly less than a transaction that involves interaction with an actual human. Obviously there are costs for running a website and distributing products, and honestly I have no idea how this cost compares to that of running a store and distributing products to a store. However, these costs are obviously different, and as such I have to wonder how this affects both the cost and profit margin of any item. The bottom line here is that if items are priced consistently across channels before shipping cost, customers are NOT paying the same total amount across channels, and as such perhaps consistent pricing is not the most customer-centric way to handle things.
What if we integrated the cost of shipping into the cost of running a web store (just as we integrate the cost of running a brick & mortar into the cost of items sold there)? In person, customers are not asked to cover shipping to the store, or to pay wages of the employees of that store on top of the price of the item — that is integrated into the cost.
When I interact with the customers of the company I work for, the most common request is always free shipping — people see it out on the web, but we rarely offer it — and this upsets them. Some friends of mine at another online retailer shared some promotional testing that they ran –”10% off” coupon versus a “free shipping” coupon. In many cases, the 10% off turned out to be a larger discount off the overall price, however the free shipping coupon was FAR more effective. Why? Presumably because customers feel that paying a premium to shop via their preferred channel is unfair; depsite the fact that they would save more with 10%, paying shipping in any scenario just seems like a rip-off.
Is the pay-for shipping model inherently flawed and doomed to fail? How can we fix it?