Free Shipping Day is a one-day event held annually on December 18th. On the promotional holiday, consumers can shop from both large and small online merchants that offer free shipping with guaranteed delivery by Christmas Eve. The 2012 event was scheduled for Monday, Dec. 17 and included more than 1,000 participating merchants.
Free Shipping Day was started in 2008 by Luke and Maisie Knowles, founders of Coupon Sherpa and FreeShipping.org, in an effort to extend the online shopping season. Statistics at the time showed online shopping peaked on Cyber Monday, generally held the week immediately following Black Friday. Consumers believed they would not receive their online orders in time for Christmas after that date.
The first event was created in two weeks by Knowles. Several hundred merchants participated and media attention was unusually high. In 2009, more than 750 retailers participated, with 350,000 plus sales taking place through the official site www.FreeShippingDay.com. Merchant participation has more than doubled each subsequent year. Knowles talked with TIME magazine blogger Brad Tuttle in 2010 about the role of free shipping as a promotional tool, saying, "I see a trend of free shipping offers around the holidays having a lower threshold than they have in years past...we are seeing more merchants offering free shipping on ALL orders"
Free shipping is a marketing tactic used primarily by online vendors and mail-order catalogs as a sales strategy to attract customers.
Online sales model
Internet vendors benefit from a simplified sales model as compared to traditional brick-and-mortar stores. By storing goods remotely at a warehouse location and shipping goods directly to a consumer, significant transportation needs are eliminated both on the part of the vendor (shipping goods to stores) any by the consumer (traveling to stores). Additionally, near universal access to the Internet means that a relatively few warehouse locations can compete with a market without having to deal with amounts of real-estate.
Shipping and Fees
The simplified business model provides potentially lower costs or higher profit margins for remote vendors. The 'up front pricing' model attracts customers with low up-front prices reflecting the lower cost of goods to the vendor with less overhead. The vendor would then add the cost of shipping, and any other applicable fees to the order before processing. Since the vendor typically makes the shipping arrangements, it is entirely possible that the cost of shipping passed on to the consumer will not be the same as the cost of shipping borne by the vendor. Some online vendors use this as a source of revenue, further increasing profits or allowing the vendor to advertise even lower up-front prices. (The classic joke here is the "free car" worth $20,000 that has a $30,000 shipping and handling fee)