Posted by Mike Latham on January 27, 2016
The Insider Story on Why Knives Ship Free
As an introduction: Today there are many places you can get your knives online. Storefronts are getting fewer and fewer mainly because the foot traffic is getting less and less across the country. Most people do not shop storefronts anymore. Even though many people go to gun or knife shows to find a knife that suits their needs; they still end up ordering it a large part of the time online at a lower price point. Many online businesses do not have the overhead of rent, electricity, insurance, workers, etc. etc. Thus they can sell at a lower price point. Even many of the larger knife retailers that do have storefronts, have them only such that they can distribute brands that require such. These days more and more knife makers are requiring store fronts; such as Benchmade, Buck, Kershaw, etc. The makers act like they are doing this to support the mom and pop brick and mortar stores of days gone by; but the real reason is that they know that this will limit the online sales to the bigger retailers that can afford to have this "dummy" store. And I am sure that some stores get a little traffic; but I know of a few that you have to ring a bell just to get the door unlocked.
Who sets the price: So, as these larger manufacturers get control over who can buy their products at the highest discount tier; they can now control what the market price will be for the knives. Many makers today have implemented a minimum advertised price (MAP) or minimum advertised pricing policy (MAPP). The courts have said that a maker can require their distributors / dealers to honor this MAP priced or be deprived of the opportunity to sell the product. Here is a good overview article. Thus, on many brands you will notice the pricing nearly identical everywhere you go. There are online resources that break these rules because they are not worried about being suspended as a reseller. For example, Amazon pays very little attention to these MAP policies. For the most part, MAP pricing inflates pricing by eliminating a low margin dealer from pricing his products at a price that is acceptable to the dealer and a value to the customer.
How does the customer find a value: Although other makers have had MAP pricing a long time, CollectorKnives realized this dilemna when Great Eastern Cutlery began. They published a Distributor Suggested Retail (DSR) price list that dealers and distributors could not advertise knives below. Since then, many (most) makers have went to this pricing policy to prop up the market selling price of their knives. To be honest, I do see the advantages to the maker and the dealer. But the customer would be better off with a more of a "price war" marketplace. But the policies go a long way to keeping a brand viable and setting a level playing field for all levels of reseller. Without this policy, the large retailers could strangle out the smaller ones and then boost margins to an even higher level. So, we decided a long time ago to honor the policies but supplement in every way we could. If the brand has an enforced MAP pricing, we have free shipping on them. We also have a "Rewards" program and offer as many automatic discounts as our margin allows.
What does this have to do with free shipping: Ok, to the meat of the subject... Free shipping simply means that the retailer has built the price of shipping into the sales price of each knife. So, if you pay attention to the "delivered" price of the knife - very rarely does free shipping save you anything. Moreover, and this is very important, if they are building the price of shipping into each knife; then you are paying the full shipping cost with EVERY KNIFE you purchase. So, if you purchase three knives in your order, you probably just paid a built-in shipping cost of $18-20 (if the reseller uses priority mail). For this reason, we only use free shipping on items that are MAP priced and we price them at the very lowest price we are allowed to sell them. The brands that we are allowed to set our own price will not have free shipping because we want you to buy whatever you want knowing that you will see exactly how much you are being charged for shipping when you checkout. And if you buy three knives, you are paying a shipping fee that is as close to our actual cost as the online system can automatically calculate. There are some retailers that ship all knives free, that even bump their prices above MAP to cover shipping because the factory set profit margin is not sufficient for them.
In closing: There are many good online knife retailers that offer free shipping on everything. But pay close attention to your delivered price. The other day I had a customer call me and complain because I would not ship my Case knife free and they could buy it somewhere else that would. I asked them what the price was at the competition and they said $52. I asked them what my price was and they said $39 plus $6 shipping. So, I told them if they wanted me to manually submit the order with no shipping charges, but a $52 selling price I would be glad to accomodate... they declined and bought two (saving themselves 20%).
P.S. Our cart system is not smart enough to figure out that if you have one item shipping for free, and another item that does not ship free will fit in the same box - it should waive shipping. Thus, if you feel this is ever the case just put in the order comments "Credit shipping charge if fits with free ship item". That way you are not paying more shipping charges, built in or not, than you should. Also, if you ever see an identical item that you can purchase (delivered) from another online store at a lower cost - call us and we will at least match that price once verified!