L. L. Bean Free Shipping Critique

The article I chose to critique was the article about L. L. Bean dropping its shipping charges for online purchases. The higher ups of the company believe that this will cause an increase in profits in the long run, but I believe that it will have a significant increase in short term costs. Eventually I think it will lead to an increase in consumer demand for the goods sold by the company. Given the choice between similarly priced products, customers will opt for the one that does not have the additional shipping cost. One concept that was not mentioned in the original post was the opportunity costs associated with this decision. While they will probably increase their number of products sold, they will have to sell more in order to balance out the shipping costs that they are waiving for the customers. The company is absorbing these additional costs so there might be a slight increase in retail prices to offset the shipping cost. I do think that this is a good idea for L. L. Bean to do since it will bring in additional revenue as demand for the product increases. I also like the original poster pointed out the concept of how this relates to GDP. They said that this idea of getting rid of the shipping costs will increase demand for the product, which will in turn increase the consumption of this product on a national level, which makes up one of the four factors that determine the Gross Domestic Product rate. I can only think of one negative consequence that may rise from this that goes along with the previously mentioned rise in price. With the absence of an additional shipping charge, more people will want to buy their products which will in turn cause an increase in demand for the products. Due to the increase in demand, L. L. Bean will have to increase their production and increase their supplies of items. Since both demand and supply are rising, the equilibrium price will also rise, causing a rise in retail prices. One thing in the article that I thought was interesting that was not mentioned in the original post was how the company is promoting this new change. The company announced this change by email and television ads, but they are also picking up the bus fare on six city buses in Boston that will be covered in L. L. Bean advertisements.