Perhaps I need of a good hobby, but I find free shipping fascinating. According to a research paper written by Wharton marketing professor David Bell, “a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.” If you didn’t get your fill of math formulas from Good Will Hunting or you’re suffering from insomnia, then you’ll want to read Dr. Bell’s 31 page research paper to understand the math behind this claim.

According to the Shop.org/BizRate Research eHoliday Mood Study, 83 percent of online retailers this year were planning to offer free shipping with conditions. And, 36 percent of online retailers planned to offer free shipping without conditions. I wonder how many of these retailers wish they didn’t have to offer such promotions? Based on the conversations I’ve had, most retailers lament the advent of free shipping. While it’s great for shoppers, free shipping is certainly not free to online retailers. Moreover, a strong argument can be made that shoppers are getting free shipping when they would have paid for it anyway.

So, would the industry be better off (or at least more profitable) if free shipping didn’t exist? I don’t think so. For most retailers, promotions are part of their business - whether it’s a sale, door buster special, purchase with purchase or something else. If, as Dr. Bell has proven, a retailer can spend less money on a free shipping promotion than other promotions, then what’s the problem? Also, how do you take into account the power of the free shipping promotions that are so prominent in marketing emails and on the home pages of online retailers? Free shipping is arguably one of the most compelling promotions an online retailer can offer. In the eHoliday Mood Study, shipping costs consistently ranks as the most popular reason online shoppers cite when asked what prevents them from purchasing more online. Free shipping gives customers what they want. Still not convinced? Think about what makes store pick-up so popular. My guess is that not paying for shipping is one of the top reasons for store pick-up representing 30 percent of the online orders of retailers who offer it. If anyone has conducted research on store pick-up, please share the results.

Have I convinced you? If not, it doesn’t matter because more than 8 out of 10 online retailers are already offering some type of free shipping during the holiday season. But, maybe it’s worth considering during other times of the year? And, if you haven’t done so already, some detailed analysis of when to offer free shipping and pricing thresholds could result in free shipping strategies that deliver (no pun intended) more revenue and higher margins.