This weekend I had the option of hauling myself to Lowe’s (my closest hardware store open on Sundays), driving even farther to a Home Depot … or ordering online. The clincher in my decision was that Home Depot offers free shipping on more than 60,000 items, including the plumbing piece I needed, saving me gas money and time.
This past holiday season, 40 to 45 percent of online retailers offered free shipping in an attempt to secure sales, up 10 percentage points from the previous year, according to Bloomberg News. And, in a 2010 Forrester survey, 44 percent of participants said they abandoned an online shopping cart because of high shipping costs — the top reason for not completing an online purchase.
Americans are voting with their dollars: They don’t want to pay shipping fees any longer.
And retailers are responding. You’re probably seeing other major retailers including Amazon and Target offer free shipping with a minimum purchase, usually from $25 to $100. Now L.L. Bean has opened the door for smaller retailers by joining veteran Zappos.com in offering free shipping on every product year-round.
Fiona Dias, executive VP of strategy and marketing for GSI Commerce, says the move by L.L. Bean is “revolutionary” and trumps what she calls the “free shipping sometimes” strategy. “For consumers that’s irritating, because you might have been price shopping on Monday, and now it’s Wednesday and the price has gone up.”
Because of Amazon’s success with both its $25 minimum for free shipping and Amazon Prime, a $79 membership for two-day shipping year-round, other companies are studying its business model and borrowing tactics, Dias says.
“What happens with customers is once they feel they’ve paid their membership dues, they want to shop more,” she says of shipping memberships. “From a retailer expectation, you’ve made shopping so easy, so frictionless that the consumer will end up buying more.”
Companies are crossing their fingers that extra purchases will make up for the hit they take on shipping. Indeed, a 2010 BizReport survey found 93 percent of respondents said free shipping offers would entice them to spend more money with online retailers.
“I would expect more and more companies to move to free shipping every day if they haven’t already,” Dias says. She also expects many retailers who offer a minimum fee to lower it until they’re in the $25 range for most items.
“If you look at 2010, Amazon grew 10 billion [dollars] in sales, from 25 billion to 35 billion, which is unbelievable growth. No other retailer grew that fast,” Dias says.
“The big-box retailers are going down that list and saying, ‘We need to do as many of these things as we can do to match up.’ If they don’t, they’re going to go out of business, and free shipping is one of the ways to compete.”
Do you wait until shipping is free on retail websites or buy enough to get shipping fees waived?
– By Lauren Davidson, Atlanta Bargain Hunter