In case you missed it last week amid all the headlines about the war with Iran and how it’s impacting supply chains — as well as the ongoing drama with tariffs — there was an article in the Wall Street Journal that caught my attention. Its title: “We Got Hooked on Fast, Free Shipping. Now Retailers Are Taking It Away.”
“After years of priming us to expect speedy deliveries, the ever-growing e-commerce economy is weaning us off them — and no one seems to mind,” Esther Fung writes. Here are some additional excerpts from the article:
For years, online retailers were willing to eat the cost of fast shipping in the battle for customers. But shipping costs have increased sharply — especially for home deliveries — and offering near-instant gratification for online orders is no longer a sound business strategy for many.
[Parcel shipping costs] have climbed dramatically in recent years. Since 2020, the two leading package carriers [UPS and FedEx] have raised their base rates by 4.9% to 6.9% annually. In addition, they have increased their ancillary fees, including fuel surcharges, address-correction fees and an added charge for delivering to residences. They’ve also imposed stricter rules on package sizes, so that dimensions get rounded up.
It’s about time.
Way back in June 2017, I wrote a post titled, “Free Shipping Is Costing More (As Small Packages Flood Delivery Networks).” Here’s what I said at the time:
The bottom line is that free shipping is costing more, and as parcel shipping continues to grow and small packages continue to flood delivery networks, somebody has to pay the bill. UPS is basically saying [by introducing a new peak season delivery charge], “I’m done holding this bill — it’s time for all of you to chip in.”
I revisited this topic again in April 2019 in a short video commentary, “Amazon Prime Free 1-Day Delivery: Do We Really Need It?” In it, I addressed the following question:
As consumers, we might want free 1-day delivery, but do we really need it — especially when you consider the trade-offs in terms of more packaging, more deliveries, more traffic congestion, and greater environmental impact?
I beat on this dead horse again in an August 2020 post titled, “Free Delivery Gets More Expensive.” Here’s what I wrote at the time:
Free shipping keeps getting more expensive, and we will all pay for it, one way or another.
For many companies, parcel has gone from being a niche transportation mode (“mailroom shipments”) to a critical one representing a growing share of their annual transportation spend. The ability to manage this spend effectively — in light of growing volumes and more demanding customer expectations — is what will separate the leaders from the laggards moving forward.
And here we are now, almost six years later. At last, the willingness to absorb the cost of fast shipping appears to be fading for many (if not most) retailers.
Maybe the added costs of tariffs and the end of the de minimis exemption have played a role. Or maybe sanity and rational thinking have finally taken over, putting parcel shipping on the same plane as other transportation modes — where cost, service, and quality have always required careful trade-offs.
Nothing in life is free — and that includes free shipping, which has become an albatross around the necks of many retailers and parcel carriers.
I’ve been saying that for years. And if the Wall Street Journal article points to a growing trend, then that albatross may finally be taking flight — better late than never.
