A recent Retail Wire post asked its readers if free shipping is a “thing of the past?” It noted that free shipping went from an “exciting perk to a customer expectation” (thanks to Amazon). But now, due to rising costs, the post’s writer, Matthew Stern, says, “Retailers, including Amazon, are dialing back free shipping policies to maintain profit margins.”
I noticed the same thing while online shopping this year. Many well-known brands with $50 free shipping minimums raised the minimum purchase to $75. Other companies that featured “free shipping sitewide” promotions had more exceptions than previously.
Amazon increased the price of its Prime membership to $139, but
“no longer guarantees two-day shipping on all orders.”
Stern also reports that companies like Starbucks and Dunkin’ “raised the threshold for their rewards program members.”
There are exceptions among major retailers, of course. Stern says Kohl’s increased sales by lowering their free shipping threshold from $75 to $49.
Stern’s readers added their insights into how companies might be able to eliminate the free shipping option.
Those who think free shipping was no longer viable as a regular option:
- Re-educate your customers about how free shipping negatively impacts the environment
- Only offer free shipping options a few times a year, making them more “special”
- Create a subscription program and only offer free shipping to top-level customers
Those who thought free shipping was still viable:
- Free shipping needs to stay to keep customers happy
- Absorb free shipping costs into product pricing, or customers will opt to shop more in-store than online
- Raise free shipping minimums
While shipping costs are no doubt eating at your margins, calculate how much business you might lose if you charge for shipping before you eliminate the option. Shippo’s State of Shipping Report reveals that only 3% of consumers say they don’t care about shipping costs, 42% say they’d join a loyalty or membership program in exchange for free shipping, and 47% say they’d meet a minimum payment to qualify for free shipping.