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CNN reports that consumers are becoming more sensitive to shipping costs as companies such as FedEx and UPS are forced to raise their prices because of increased fuel costs. “With increased competition for budget-conscious customers, stores and online sellers are negotiating lower rates with shippers, or eating the rising shipping costs themselves, and dealing out offers for free shipping or delivery.

“Whether it's a flat rate for ground shipping or a fuel surcharge, shoppers are wary of any added expense and it doesn't take much to become a deal breaker … Consumers are becoming more adept at comparing online and offline prices to find the best possible deal before making a purchase - and often the savings is in the shipping.”

KC's View:
The Washington Post had a similar story the other day, which prompted me to comment: “I used to believe that free delivery – or at least the illusion of free delivery, as in the case of Amazon Prime – would be a cost of doing business in the e-grocery sector. I’m not so sure of that anymore, and tend to think that consumers will understand fuel surcharges that are fair and transparent. We all understand how expensive gas is…it all will depend on the way it is done.”

Or not.

I still think that the Amazon Prime program is a great model because it isn’t so much about shipping as it is about loyalty.