We know free shipping isn't really free. But how much does shipping truly cost? The answer: It varies and making guesses can be detrimental for companies. Even for shippers that think they’re doing everything right, skipping the research on freight and dimensional weight fees can come at a huge cost — potentially even risking the entire business.
Sealed Air recently engaged with an online retailer of discount shoes that fulfilled and shipped 2.5 million orders from three different warehouses across the U.S.
Like most e-commerce businesses, the shoe company strived to meet rising expectations for speed and convenience by absorbing shipping fees in house instead of passing these costs on to customers. This is a common practice for e-commerce operations, and for good reason. According to the National Retail Federation, many online shoppers consider shipping costs before getting to the checkout page, with 65 percent saying they review free-shipping thresholds before adding items to their online shopping carts. Offering free shipping worked in this company’s favor for a while as a way to encourage sales, but ultimately the shoe seller struggled to get enough boxes out the door to keep up with rising demand.