E-tailers Backpedal on Freebies

Think Free! Free delivery. Free samples. Buy one, get one free. Free ISPs. Free prizes.

Such no-charge perks of online shopping have become staples of the Internet economy, even though we all know there’s no such thing as a free lunch. What made us believe we could change that axiom with a few keystrokes?

The Internet, so we were told, was all about freeing up our time while sometimes providing us with goods and services for which we would not have to pay. The idea was mildly intoxicating for consumers endlessly trying to stretch a dollar.

There was only one problem with the e-commerce approach to free stuff: It was offered in the wrong order.

The simplest psychology of consumerism dictates that smart businesses add perks as they mature and become financially stable. To debut with irresistible perks and then take them away when the company has to tighten its fiscal belt is bad marketing.

Still, that’s precisely what is happening.

Cartus Interruptus

On a recent return visit to consumer technology e-tailer Outpost.com to purchase a US$89.95 New York Yankees jacket for a young relative, I was not pleased to find a $12.95 overnight delivery charge added to my bill. Apparently, Outpost had decided to save money by limiting its previously free delivery to orders over $100.

Trying to find something useful to buy for 10 bucks to ensure that free delivery was no solution. I just don’t need a new portable, purple DVD carrier, even if it’s only $9.95. In any case, I’d still have been 10 cents short of free delivery.

My reaction? I humbly admit I abandoned my shopping cart.

Meanwhile, other Web sites are following Outpost’s dubious lead. Struggling online grocery delivery service Webvan, for example, unceremoniously tacked on a $4.95 delivery charge on all orders under $75.

And The Losers Are …

These companies would like to forget that free shipping was a key come-on, a lasso to lure consumers when they were feeling most vulnerable. If new e-shoppers felt shaky about the whole business of point, click and spend, then free stuff served as the last shove needed.

Consumers liked free shipping, just as they like the virtually tax-free status of Internet orders — another online plus that is currently in danger of extinction.

If consumers are losing perks and e-tailers are losing customers, are there any winners here?

Gimme An ‘N-A-P-S …’

Meanwhile, it’s not just free shipping that is being retired to the history books of e-commerce. Everything free seems to be evaporating.

Last month, Yahoo! started charging listing fees for auction item placement, just as previously free ISP services such as NetZero began charging access fees to users who surfed more than their allotted hours.

Caving in to pressures from the recording industry, Internet music-sharing service Napster, with 57 million registered users, has announced it will start charging users to subscribe. Considering many of Napster’s users are in an age bracket that doesn’t even begin with a two, one wonders if that impressive constituency will rapidly dwindle.

Of course, the file sharing on which Napster’s entire model is based won’t disappear just because one company decides to go legit and charge for it. Clones will likely fill the space, further eroding Napster’s hold on free music lovers.

Indirect Hits

Other reductions in freebies will affect consumers indirectly.

Amazon.com’s announcement this week that it will charge publishers up to $10,000 per book title for the privilege of being recommended in special e-mail promotions is a blatant example of e-commerce gone awry.

Until this unfortunate development, books were recommended based on projected consumer interest and, believe it or not, literary value. The corporate combo of “publishing house plus e-tailer” will now steer consumers in the direction of books that the companies have already agreed to promote. Small publishing houses that cannot afford the $5,000 to $10,000 Amazon-imposed fees suffer first.

Nobody wins, least of all Amazon, which may very well be pricing itself out of the market. Publishers are traditionalists and will likely not take kindly to being gouged.

Nice While It Lasted

The short but sweet era of free stuff on the Internet is almost over. Unfortunately, adding charges to services about which consumers already feel somewhat ambiguous is not a wise business move.

It may come to haunt some e-tailers as shoppers rediscover the allure of bricks and mortar.

What do you think? Let’s talk about it.