Can retailers survive without offering it?
Free shipping for online purchases is increasingly an expectation that retailers must meet to make a sale. Amazon has become the world’s largest online retailer in part because of its Prime program, which offers members free two-day shipping on all purchases, no matter how inexpensive, for a $119 annual fee. Amazon’s success spurred competitors such as Target, Walmart and Best Buy to offer their own free-shipping deals during the 2018 holiday season. Experts point out that free shipping is not totally free; many consumers either pay fees to membership programs or add items to their online shopping carts to meet the free-shipping threshold. Yet customers increasingly demand some form of free shipping, and close to half of those surveyed last year said they would abandon a purchase if they discovered at checkout that they would have to pay for shipping. Millennials are more likely to expect free shipping than other age groups.
Some key takeaways:
Amazon Prime members spend on average more than twice as much on Amazon as non-members.
Half of all U.S. households now subscribe to Amazon Prime, and the program has 100 million members worldwide.
Almost 70 percent of online shoppers say they expect free shipping even if their purchase is less than $50.
Resources for Further Study
Stone, Brad, “The Everything Store: Jeff Bezos and the Age of Amazon,” Little, Brown and Co., 2013. A business journalist chronicles the origins and rise of the e-retail giant and its founder.
Bulger, Stephen, “How to Offer Free Shipping Without Going Broke,” PracticalEcommerce, April 10, 2012, https://tinyurl.com/
Enright, Allison, “Amazon Prime membership growth slows in the US,” Internet Retailer, July 16, 2018, https://tinyurl.com/
Siegel, Rachel, “Amazon just upped the ante in the race for free holiday shipping,” The Washington Post, Nov. 5, 2018, https://tinyurl.com/
Ungerleider, Neal, “Free Shipping Is A Lie,” Fast Company, Nov. 1, 2016, https://tinyurl.com/
Reports and Studies
“Customers want to find what they’re looking for, and say online shipping should be quick and free,” National Retail Federation, Jan. 16, 2018, https://tinyurl.com/
“2018 Holiday Retail Outlook,” Alliance Data, 2018, https://tinyurl.com/
“2018 State of Shipping,” Shippo, 2018, https://tinyurl.com/
“UPS, Forrester Research Reveals Free Shipping Trends,” Multimedia Merchant, June 22, 2011, https://tinyurl.com/
Chaffey, Dave, “Amazon case study – 2018 update,” Smart Insights, Aug. 14, 2018, https://tinyurl.com/
The Next Step
“Amazon launches new autonomous self-delivery device called Scout,” Tech Startups, Jan. 23, 2019, http://tinyurl.com/
Haddon, Heather, and Laura Stevens, “Amazon Plans to Add Whole Foods Stores,” The Wall Street Journal, Dec. 31, 2018, https://tinyurl.com/
Reisinger, Don, “Amazon Prime Has More Than 100 Million U.S. Subscribers,” Fortune, Jan. 17, 2019, https://tinyurl.com/
Green, Dennis, “Amazon will soon lose the biggest reason to pay for Prime,” Business Insider, Jan. 21, 2019, https://tinyurl.com/
Premack, Rachel, “FedEx’s new service delivers online orders hours after they’re placed — and it shows that Amazon Prime isn’t special anymore,” Business Insider, Jan. 22, 2019, https://tinyurl.com/
Ziobro, Paul, “Amazon’s Pitch to Woo Shippers: Fewer Fees Than FedEx, UPS,” The Wall Street Journal, Jan. 23, 2018, http://tinyurl.com/
American Retail Shippers Association
100 Quimby St., Suite 2, Westfield, NJ 07090
Association that represents importers and exporters of all commodity classifications; supports members’ transportation and supply-chain needs.
Council of State Retail Associations
664 Sandpiper Bay Drive, S.W., Sunset Beach, NC 28468
A portal for communications among state retail associations across the country, focusing on legislation and regulations affecting the retail industry.
3875 Airways, Module H3, Department 4634, Memphis, TN 38116
International shipping company that specializes in overnight delivery of parcels and letters.
National Retail Federation
1101 New York Ave., N.W., Suite 1200, Washington, DC 20005
A trade association that provides education, advocacy and research for the U.S. retail industry.
Parcel Shippers Association
PO Box 450, Oxon Hill, MD 20750
An association whose mission is to foster competition in the parcel delivery market; it offers legal and political representation and informs members of carrier rates.
Retail Industry Leaders Association
1700 N. Moore St., Suite 2250, Arlington, VA 22209
An association that represents retail industry executives and takes positions on trade policies that affect retailers’ supply chains.
United Parcel Service
1835 Blue Hills Drive, N.E., Roanoke, VA 24012
An international shipping company that delivers 5.1 billion packages and documents annually and generated $66 billion in revenue in 2017.
U.S. Postal Service
475 L’Enfant Plaza, S.W., Room 4012, Washington, DC 20260-2200
Service that delivers 47 percent of the world’s mail, reaching 157.3 million delivery points nationwide in 2017.