- Recent research shows that most online shoppers expect free shipping.
- But retailers need to find ways to offset rising shipping costs while satisfying customers.
- According to the WSJ, companies are raising the minimum standards to qualify for free shipping.
Americans love free shipping, but you may have to spend more money to get it. According to a new report in The Wall Street Journal.
Retailers are trying to balance the continued expectation of free shipping with rising shipping costs. Their options include raising the minimum purchase required to qualify for free shipping, speeding up delivery times, and negotiating prices with carriers.
The first option seems to get the most attention, According to the magazine. It said companies like Macy’s and Abercrombie & Fitch have raised the minimum amount for free shipping online.
Insider took a quick look at some popular retail sites. H&M offers free shipping on orders over $40. Uniqlo’s minimum standard is $99. On his Target website, customers must purchase at least $35 worth of merchandise to receive free two-day shipping.
The journal cites data from Narvar, a company that provides a “post-purchase” technology platform for retailers. Nulver said data from 48 retailers shows that the average lowest price eligible for free shipping has risen from $52 in 2019 to $64 this year.
Free shipping “didn’t last long and the party was finally over,” said Satish Jindel, president of shipping data firm Shipmatrix. told the journal.
Amazon Prime may have sparked the free shipping trend
It’s unclear exactly when free shipping became popular among e-commerce retailers, but the rise of Amazon Prime and free shipping with monthly subscriptions played a big role in this trend as companies look to compete with Amazon. The magazine says it is likely. 2017 research report by Insider Intelligence.
Amazon launched a membership program in 2005.
“Amazon Prime’s two-day free shipping has caused an industry paradigm shift,” the report said. “Online retailers, large and small, are increasingly offering perks to keep their customers from being lost to the gigantic marketplace.” Insider Intelligence is a sister company of Insider.
Carriers such as UPS, FedEx and DHL have recently faced higher costs, including rising wages and fuel prices, which have led to higher shipping costs for retailers. Some retailers have started charging return shipping fees for items that customers want to return.
But free shipping has become a fact of life for many Americans. That means it’s hard for retailers to suddenly cancel it.
According to data from shipping technology company Shippo, nearly two-thirds of Americans say they wouldn’t buy anything online if it wasn’t for free shipping.
But almost half of the customers also said they were willing to meet the minimum requirements to qualify. For retailers, this is a positive signal that raising the bar and encouraging customers to add more products to their carts may be an effective way to offset rising costs of doing business. is.
“Having some form of free shipping option is a perpetual expectation,” Krish Iyer, vp of strategic partnerships at delivery software company Auctane, told Insider earlier this year.