Should you charge customers for shipping?

Free shipping is harmful for sellers and businesses

As per Atlantic free shipping is hurting small businesses, as customers do not want to pay for shipping. They prefer paying more for the product or buying extra to avoid shipping charges.

Customers avoid shipping charges due to the economic principle of ‘pain of paying’. It causes psychological discomfort that keeps people from completing purchases. Certain factors seem to sharpen the pain. Using cash rather than credit cards typically hurts more. Venture funded startups and businesses such as Zappos and Amazon started the trend. They can bear losses. Etsy’s 2.6 million sellers — mostly women, mostly one-person operations, according to the company — are up against.

Jaffer Ali, an e-commerce entrepreneur, writes: As a matter of rule, “free shipping” plus deep discounts is a recipe for financial disaster. Yet as long as keeping up with Amazon drives your strategy, financial ruin is your likely destination. This is why so few online retailers actually make money and their numbers are quite deceiving because top line sales growth is what gets reported.

Independent businesses have to increase the prices, as they can not bear the losses. As a result the sales go down for entrepreneurs such as Miceli, a jewellery maker. Independent businesses should fight back.