Free shipping day: why not year-round?

Amy Scott Dec 18, 2015
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Free shipping day: why not year-round?

Amy Scott Dec 18, 2015
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It’s Free Shipping Day, everybody. Yes, it’s another made-up consumer holiday designed to promote retail sales, though it does have its upside for you procrastinators out there. Some 1,100 retailers are offering free shipping on Dec. 18, no matter how much you spend, with guaranteed delivery by Christmas Eve.

You can thank Luke Knowles for the tradition (or blame him, depending on your perspective). He runs the website freeshipping.org, which connects shoppers to shipping deals. He founded Free Shipping Day eight years ago, when he noticed that online Christmas shopping tapered off after Dec. 12 or 13.

“Being in the online shopping business I knew that this was bad, because we want to keep shoppers shopping online as long as we can,” he said.

It’s worked. Knowles expects retailers will do more than $1 billion dollars in sales Friday.

One of them is the boating and recreation outfitter West Marine, which typically offers free shipping to its stores or for a minimum purchase. During the competitive holiday season, there is no minimum.

“We have to be thinking about what our customers’ needs are, and convenience, and so we know that free shipping is definitely one of them,” said Richard Millang, director of digital marketing strategies.

So why don’t more retailers offer free shipping year-round?

“I always call free shipping a ‘frenemy’ of retailers,” said Sucharita Mulpuru, a retail analyst with Forrester Research. “On the one hand they love that it drives sales up, but the downside is that it is expensive.”

It’s not that easy to just pass on the cost to customers in the form of higher prices, she said, because customers are “just one click away from going to Amazon anyway.”

For customers of Amazon’s Prime service, free shipping is standard, minus the $99 annual fee. Amazon won’t say, but Mulpuru’s own estimates suggest Prime isn’t even that profitable for the company. But Amazon is such a Wall Street darling, she said, it doesn’t have to be.

“I think that why a lot of other companies get distressed is that they can’t do the same thing,” she said.

Instead, Mulpuru said, retailers compete selectively, offering free shipping on certain items or at certain times of year, when the sales are strong enough to absorb the costs.

 

 

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