Free shipping is the new normal for online shopping this year
Filed under: Economy, Macy's, Wal-Mart Stores, Target Corp., Amazon.com, Inc., Facebook
This holiday season, the big draw in online shopping will be the free shipping. Consumers are demanding it, and with this year's bareknuckle competition, retailers have no choice but to give it to them.Four out of five retailers will offer free shipping with minimum purchases this holiday, according to a survey by Shop.org, the online arm of the National Retail Federation. And 57.4 percent will offer no-minimum free shipping offers sometime during the season.
Free shipping ranked second only to social media as a popular marketing tool among e-tailers this holiday, according to the survey; 35.7 percent of stores raised their budgets for free shipping this year. "From free shipping to Facebook, online retailers are combining new initiatives with tried-and-true tactics to make their companies stand out," said Scott Silverman, Shop.org's executive director, in a statement.
And it's not just pure-play online stores like Zappos.com or Amazon.com (AMZN), which have free-shipping offers year-round, jumping on the bandwagon. As The Wall Street Journal noted recently, the Web sites of brick-and-mortar chains like Target Corp. (TGT) are offering free shipping for the holidays, and starting it earlier this year -- two weeks earlier, in Target's case -- because shoppers have come to expect it.
A slew of sites and organizations are springing up to solidify the movement. Freeshippingday.com is trying to line up retailers to offer a free-shipping holiday on Dec. 17, with guaranteed delivery by Christmas Eve. Last year, the group lined up 250 offers from stores big and small; this year, it's shooting for 500.
Big-time retailers are finding online sales to be one bright spot in a weak year. Rather than a sideshow, online sites are turning into real profit centers. Bloomberg recently reported that online sales could make a difference this holiday for companies such as Macy's Inc. (M), Gap Inc. (GPS) and Urban Outfitters (URBN), whose sites saw double-digit sales growth in September, far better than their stores.
As a consumer perk, free shipping makes sense. Search engines let shoppers find the lowest price on any product, which makes it a losing game for retailers to compete on low prices alone. Witness the response of Walmart Stores (WMT) in the battle of cut-rate books: When rivals matched its $10 offer, Walmart dropped its price to $9, and then Amazon.com undercut it with an $8.99 price -- which was all it took to display better online.
But low prices can't always close the deal. Once shoppers get to the checkout and learn what the shipping costs, they sometimes bail. Such "cart abandonment" worries e-tailers; 39 percent of shoppers in a Forrester Research study cited high shipping charges as the main reason why they walk away empty-handed on the checkout page.
And free shipping may turn out to be one of those holiday treats that hangs around, like a fruitcake. Even if this frugalista trend yields to the traditional desire for more and cooler stuff, Americans have developed an eye for what's worth spending more for and what isn't. And shipping charges are not on the shopping list.
Like free delivery, free shipping helps retailers compete across channels -- stores, catalogs, and online -- by giving customers what they want, said Ray Jones, managing director of Dechert-Hampe & Co., a consulting firm, in a study of shopper attitudes. More consumers are shopping online, the study shows, and some cost-cutting behaviors will outlast this recession. Stores will have to find those consumer hot-buttons and adapt, he said: "It comes to recognizing where your customer's pain is. It's not brain surgery."



























Reader Comments (Page 1 of 2)
10-22-2009 @ 8:34PM
Donovan said...
I for one stopped ordering on line, due to the high shipping costs. I don't mind a reasonable shipping fee. But $9.95 to ship a watch, that only weighs a few ounces. Not gonna happen. So, needless to say. I've not only saved on shipping, I saved even more, by not making any on line purchases.
So, now if I see an item with a reasonable price, and FREE shipping. I just may start making on line purchases again. I'm not one to pass up a good buy, when I see one.
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10-22-2009 @ 9:23PM
marc said...
They are making out like bandits on those "shipping" costs. I used to work for a mail order supply. Bet it costs like $1.46 to ship that watch. They get like half or more off of what UPS or Fed EX charges most people. Depending on how much they ship. And a book can be sent USPS very cheap because the govt started that for schools and libraries. I had a guy even try to charge way more than I would pay and he said, it's "normal" in the mail order business. They probably make more on that then the sale of the item. Then they wonder why people bail on them.
MARC
10-22-2009 @ 9:06PM
rann948 said...
Watch out internet lovers. Obama, through the FCC, is making plans to control what you can access on the internet. Soon we will be in the ranks of Venezuela, China, and Iraq.
Power corrupts an absolute power corrupts absolutely.
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10-22-2009 @ 11:36PM
AP said...
Your post makes me think of two words: Colonel Flagg!
10-23-2009 @ 6:45AM
Debra said...
and Bush wasted BILLIONS of our tax dollars and is responsible for the DEATHS of HUNDREDS of THOUSANDS of innocent civilians in Iraq and Afghanistan....
Why don't you think of a new line? All you LYING Repugs are why the US is in such a mess.
Are you happy you and your Congressmen and women have brought my country to it's knees with it's idiotic policies for 8 years? NO, since the Reagan years you have, bit by bit, destroyed a little of my country. You freaks are nearly through destroying the USA. Happy???
Repugs lie about everything....YOU probably are happy!
TRAITOR!
LIAR!
IIDIOT!
10-23-2009 @ 11:52AM
NikonF2-AS said...
ATTENTION: DEBRA
Debra, I read your post in total disbelief. That was some pretty harsh flaming. Your comment on Bush: Yes, he spent and wasted Billions of taxpayers dollars. The last eighteen months of his presidency, was not impressive. At the end, the Stimulus Bill, my first thought was give Dr. Jack Kevorkian a call. I felt my brain(its old) was going to explode. After some serious thought, why would an out going President, sign and pass such a monstrosity of a bill. He wouldn't! There were many closed door meeting with his Cabinet and President-elect Obama and his staff. If you watched former President Bush as his presidency drew to an end, he was under extreme pressure. I don't need you to agree with me, but, President Bush was and is an honorable man. He made decisions with the American people in mind. Behind those closed doors, he made some tough decisions. You saw the news reports, many people wondered why he didn't retaliate on many of President-elect Obama's comments and charges toward President Bush and Senator John McCain. Simply, he made decisions he felt were best for the American people. Remember, there were closed door meeting with select members of Congress and President-elect Obama at end. There was a decision made to finally let the American people in on the pending explosive sub-prime mortgage hypocrisy. They knew America was in serious inconvenience. President Bush signed the Stimulus Package knowing that President-elect Obama would be signing even more Stimulus Plans. They knew it was big, just not how big. In essence, President Bush took a bullet for Obama.
The slaughter of innocent civilians: Collateral Damage! It's a War, not flag football. It's not just lying Repugs. There are also lying Dem(ented) Liberals. Debra, do your research, the whole of Congress are connected at the hip on this slow destruction of America. Happy? NO, I'm not happy.
Ted Kennedy: Almost four months sober. Attain sobriety? Who knows?
Michael Jackson: Mom's are letting little boys out to play.
Serena Williams: The ball was INSIDE the lines. Bummer!
INFO ALERT! There is No such thing as a 'Hate Crime'!
10-22-2009 @ 9:09PM
Bob said...
Free shipping sounds fine to me!
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10-23-2009 @ 12:46AM
Tony said...
I do most of my shopping on line but like what the article said, when I am ready to check out and see that ridiculous shipping cost, I empty my cart immediately. There are a lot of on line retailers that offers free shipping for a minimum purchase, and so I just wait till I can combine all my purchases to meet that minimum. I rather not pay any shipping if possible unless I really need the item right away.
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10-26-2009 @ 5:47PM
Kate said...
At some point consumers are going to have to realize, stores have to make a profit someway. Consumers want cheap pricing and free freight. Great... but how does a company stay in business and pay their employees a decent wage? And generally it's not the company who is charging big freight, it's UPS, FED Ex, etc. Their shipping rates are high. I've been in business for 30 years and I can tell you, it's tough to make a buck.
Americans scream they don't want China products, but Americans don't want to pay for anything either. So where do American companies have their products made? China. You bet. Because Americans want cheap pricing and FREE freight. Enjoy.
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10-23-2009 @ 6:54AM
Debra said...
You are exactly right Kate. Americans do not care about American Companies. They want CHEAP everything. "Made in the USA" is a thing of the past, and they wonder why the unemployment rate is over 9%. WE don't MAKE anything anymore!
The USA is a SERVICE oriented country, and the only thing keeping us a Super Power is the number of nuclear weapons we possess.
What happened to only buying American products?
After 9/11, it was sickening to see so many people flying American Flags on FOREIGN CARS!
People call themselves patriotic. They aren't when it comes to saving a buck.
"We support our Troops" eveyone yells until it is time to give them a pay raise so their wives are not shopping with FOOD STAMPS!
Some patriots those cheap people are!!!!
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10-23-2009 @ 8:33AM
Gary said...
I doubt 4 out of 5 will offer free shipping, hasn't happened yet. Maybe they'll offer free shipping but charge a handling fee (thats always the killer, its the handling charge, not the shipping). I think they'll get their money one way or the other.
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10-23-2009 @ 8:06AM
Sally said...
Free shipping is a joke. The seller just factors it into the price of an item. People are so easy to fool when they want to be fooled.
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10-23-2009 @ 8:30AM
Karen said...
As a merchant I'd LOVE input from consumers on this topic, we struggle with it every day. We do charge shipping on our products because of the high costs involved with shipping: boxes ($1.50 to $25.00 each), bubble wrap ($150/roll), styrofoam, packing tape, shipping labels, ink to print the label, employees to package the products, employees to log in to UPS and enter the shipping information, weight, value etc. of every item we ship.
We also have a retail store where a customer can come in and walk away with his purchase with no shipping costs, of course.
I'd love to know the answer from consumers: am I better off to add to the cost of every item (increasing the cost that a walk-in customer pays, and therefore higher sales taxes too) so that I can offer free shipping?
Please share your insight with me!
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10-23-2009 @ 10:33AM
Mike said...
Bottom line, Karen, is I don't mind paying a reasonable shipping cost, but if I feel that you're making a profit on both the product AND the shipping, I'm out the door. So many people use eBay - we pretty much know what it costs to ship something, and we assume that retailers get volume discounts on their shipping. So, if you charge more for shipping than we know it costs to ship an item, we won't fall for it. (That also goes for you eBay sellers who list stuff for .99/no reserve and then try to jack your buyers for outrageous shipping charges!)
10-23-2009 @ 10:26AM
rad said...
Sure, you can raise prices to offer free shipping, then the customer will just find another store offering free shipping and cheaper products.
10-23-2009 @ 1:27PM
Jeff said...
I appreciate the dilemma of online retailers, but consumers do not want to pay more than they have to in order to obtain what they want.
It's difficult to compete online with products, since identical items are obtainable at many retail sites, and it's difficult to compete on price because of competition. Your only other option is to compete on customer service.
One annoyance I have with shipping is that some retailers have a flat rate, say $9.95, on everything. That really jacks up the price if you're buying something for $50 or less. My suggestion is to find comfortable pricing on orders, based on the amount of the order. Keep the shipping charges low if the customer is spending less, then raise it gradually until some point where they've spent enough to earn free shipping.
The graduated system is more difficult, but it does demonstrate sympathy from the retailer for the customer to pay extra (shipping) in order to obtain their items. Give your good customers (large orders) the benefit of free shipping, but don't gouge the little guy on smaller purchases.
10-23-2009 @ 2:24PM
NikonF2-AS said...
Karen: Educated people know there is no 'free lunch.' Mike and Rad's comments, of course, have merit. However, statistics show shoppers will buy local if that product is available. Also, be willing to pay a reasonable higher price. The convenience of cash and carry, is a very strong incentive. Obviously, not knowing your merchandise and profit mark up, limits my input. You may have seasonal items, items that represent local high schools, a community college, state university, etc. Recalculate, make sure your shipper offers the best services, pick up times and times per week for the cost. Again, not knowing, inhibits any other suggestions. Karen, you will find the solution and you will make it work.
NEWS FLASH: There is no such thing as a 'hate crime.'
10-23-2009 @ 9:50AM
DM said...
I hope to see some more posts like Marc's. From someone who's been in the business of padding the bottom line by charging those obscene S&H fees. If a one ounce letter can go for a few cents, why does a one ounce package take a few dollars instead of cents? I feel a bit of guilt shopping online because it's taking away dollars from what's left of a business district in my town. Unless of course the item isn't available here.
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10-24-2009 @ 4:02PM
Robin Hinaman said...
I'm pretty excited about the newest way to shop online that offers in a lot of cases free shipping.
It's a new Internet platform called "Blastoff" It gives the best prices retailers are offering and it gives cash back.
Most importantly....It's free, It's fun, It's easy and you can get your very own by going to: my.blastoffnetwork.com/robinhinaman68 and joining for free.
You create your own page and invite your friends and get paid for the referal. Over 400 retailers.
My friend got a free Blackberry and sent to her in Hawaii for no shipping charges....can you believe it?
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10-24-2009 @ 7:15PM
Cinderella said...
These a--hole companies on the Internet and I mean a majority of them RAPE you on shipping after they offer you a seemingly great deal on their product. This is why Ebay put new shipping "caps" and rules on the sellers that sell on Ebay. They were charging $19.99 to ship an item that would cost $4.50 to ship Priority Mail & this was only First Class mail at their end. It's about time someone woke up. The good thing about shopping online is that is most cases you spend $50 & shipping is free, you buy that item OUT of the state you live in & you can even save on the sales tax. People are starting to come around with Internet shopping & figuring out that it is a better deal than the hassle of the mall. There are still the Internet scams out there so be a savvy consumer in any market.
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