Is Free Shipping a MUST in this economy?

On November 10th, shop.org had a blog post titled "Is Free Shipping a MUST in this economy?". I've seen this posted numerous times around the internet in several blog posts including this question posted by Future Now: Do customers prefer to see a Free Shipping offer rather than calculate and pay a lower price that includes paid shipping?

Being very logical, I personally always like to know my total acquisition cost (both the item plus shipping and taxes) before I commit to a sale and I always opt for the lowest price. For me "Free Shipping" always seems like a gimmick because I know that the product price will reflect the shipping (FedEx has yet to offer free shipping).

When I buy a book, I typically put Amazon.com verses Amazon.ca verses Chapters.ca to see where I have the lowest total cost. (As a Canadian all three websites will ship to me and I'm often amazed at the price difference and that there is often a clear winner every time).

I do think the average web customer is fairly savvy (and more savvy than the 2005 experiments I've read research on), so I'm not sure they fall for a higher cost product with a free shipping offer. Having said that, I do still think there is some perceived value in "Free Shipping" that can affect customer decisions.

When I look at free shipping, here is what I know: whenever companies start to compete on price it's a spiral downwards. On the internet, I can easily pit three companies against each other that sell the same commodity. Price is not a great way to differentiate yourself (unless you're Wal-Mart). You want to tell a different story rather than being the lowest cost provider.

From a winery perspective, wine is heavy and expensive to ship. Free shipping isn't really a long term sustainable promotion. Most of the time free shipping promotions are offered on large volume orders (case or more) which doesn't always bode well for first time customers who only want to sample your wine.

As a winery, I personally think you need to keep shipping reasonable (possibly even have it as a lost leader), you need to be open and upfront the total product cost (tell them the shipping before you get to the cart), and ultimately you need a better selling proposition than free shipping (ie focus on your product, on your delivery, on your service, etc).

What do you think?

P.S. Do any of our clients, or possibly Crushpad ecommerce clients (who all use our platform), or perhaps even another winery want to run an A/B experiment where half of your traffic will have free shipping and the other half would have  regular shipping and we can calculate the overall affect on your orders this Christmas season? We would be willing to help setup and conduct this experiment and I think we have time to do this yet this holiday season. Feel free to contact me.