The power of “free”
The offer of free delivery seems to hold a special power over online shoppers. We go out of our way to cut delivery charges, perhaps searching for special offers or accepting longer delivery times. Why do we begrudge paying small fees, such as delivery charges, so much? Founder of People Patterns consultancy Bri Williams refers to a study from the Reserve Bank of Australia that found an “irrationally” high number of people cancelled their transaction at an automatic teller machine when they discovered they would be charged for using it. Williams writes: “People hate service fees so much because they decouple the value of the good from the service in getting it to them.” Respondents in an earlier eZonomics poll were split over whether they were more likely to buy a product if they got a free sample. It highlighted how free samples are seen as a “kind action” and can prompt the taster to reciprocate with their own “kind action” by buying the sampled product.
The chocolate experiment
Online shoppers and ATM users are not alone. Many studies have investigated the power of the word “free”. Behavioural economist and author Dan Ariely insists on spelling the word “FREE!” – such is its power. Ariely blogs about an experiment outlined in his book Predictably Irrational. In the experiment, students were offered a Lindt Truffle for 26 cents and a Hershey’s Kiss for 1 cent – with 40% buying the truffle and 40%the Kiss. When the price dropped for both by 1 cent, Ariely saw 90% opt for the free Kiss, even though the relative price between the two was the same.
Watch for drips
Delivery charges for online shopping tap also into the important issue of drip pricing. As the article What is … drip pricing explains, it happens when optional or compulsory extras are added to a shopping bill during the buying process, making it harder for the consumer to see the true cost. Airline travel can be an example (such as when fees are levied for luggage, food and particular seats). It is often difficult to see these charges up front but being wise to them can pay off.