End of ‘free’ shipping? What Amazon and others are doing

Los Angeles –

There is no such thing as free shipping.

Still, online retailers such as Inc., which use so-called free shipping to boost customer loyalty, are scrambling to keep profits from drying up as costs rise and e-commerce deals come through. is working on

They’re adding fees to speed up services, raising minimum purchase requirements, and making other changes that pass on more costs to consumers struggling financially.

Ken Morris, managing partner at Cambridge Retail Advisors, said of the rapidly changing retail marketing tools, “There are only a few free shipping days left.

Morris said retailers are starting to look like some airlines charging for better seats, luggage carriage and limiting the use of frequent flyer points.

It’s no secret that most retailers raise their product prices to subsidize free shipping. Still, product inflation and skyrocketing shipping costs are making services unsustainable as a possible recession threatens to hit already sluggish online spending.

Amazon touted free shipping as a differentiator and took advantage of its expensive Prime subscriptions and huge profits from other businesses to cover the cost of shipping packages, so other retailers, even if they lacked Amazon’s advantage, could not. Even so, I was forced to follow suit.

An industry where nearly three-quarters of e-commerce companies offer some kind of free shipping amid shrinking retail margins and record shipping rates for United Parcel Service Inc., FedEx Corp. and US Postal Service rethinks the economic costs of habituation. Free shipping for shoppers.

Lee Spratt, CEO of logistics services provider DHL eCommerce Solutions America, said reducing shipping costs is a top priority for retailers, with speed a close second.

Retailers from Amazon to dog treat seller Einstein Pets, and ubiquitous apparel chains like Zara, Abercrombie & Fitch, and Foot Locker are losing money on the services consumers have come to expect. is drawing a line.

Mingshu Bates, chief analytics officer at consulting firm AFS Logistics, said this has led to a goal of up to 25% reduction in shipping costs.

After forcing the dominant e-commerce industry to offer both free and expedited shipping, Amazon’s latest move is beneficial.

The online retailer, which recently raised the annual Prime subscription price by $20 to $139, now offers “free” same-day shipping to Prime members in at least 12 US cities, including Los Angeles, Chicago and Philadelphia. It offers. However, it comes with a condition, as the service is only free on his orders of $25 USD or more, and costs him $2.99 ​​if orders fall below that.

Earlier in March, Amazon raised the minimum threshold for free Prime shipping from struggling online grocery businesses from $35 to $150, and $3.95 to $9.95 for orders below the new limit. Added a charge for

Amazon CEO Andy Jassy said in February that the company is streamlining costs across its business, and that shipping speed won’t fall victim to its drive for efficiency. The company added that Prime shipping speeds will be faster in 2021-2022 and will improve further this year.

“What are we paying for?”

Meanwhile, some consultants and customers are noticing changes in their services.

At Amazon, “same-day or on-time delivery doesn’t seem to be a top priority anymore,” said e-commerce consultant Chris McCabe.

Dozens of Prime subscribers, including upstate New York middle school teacher Brian Fabiano, took to social media to question the value of their Prime subscriptions, especially after package deliveries were delayed during the holidays. I’m here.

“My wife and I are Prime customers because of the shipping (perks). If they don’t provide it, what are we paying for?” Fabiano, 48, told Reuters .

In fact, non-Prime shoppers get free standard shipping on Amazon orders over $25. Walmart WMT.N and Target Corporation have struck a delivery deal worth about $100 a year and offer free shipping on orders over $35 for non-members.

Nearly three-quarters of the top 1,000 retailers in the U.S. offer free shipping on at least some orders, and 45% enjoy the offer, according to industry research firm Digital Commerce 360’s August 2022 survey results. requires a minimum purchase amount of

While retailers such as Amazon and fashion company Asos have raised the bar for fast shipping, others have eliminated free shipping altogether or raised product prices again.

Atlanta’s Einstein Pet was stuck “between a rock and a hard place,” according to owner Kelly Ison. Moved to protect profits by ending free shipping on purchases of Einstein’s signature dog treats.

“We cannot compete with Amazon,” she told Reuters.

In order to bear the rapidly rising shipping costs and avoid uncompetitive price increases, Ison switched to US$8 flat rate shipping. She has lost some customers but continues to make her profit.

Toronto-based United Filter Co has increased the price of its furnace filters so it can continue to offer free shipping on sales on Amazon, Walmart and Ebay. Darrin Landau told Reuters.

The company split the difference, he said. “People are just crazy about free shipping.”

(Reporting by Lisa Baertlein in Los Angeles; additional reporting by James Davey in London and Corina Rodriguez in Madrid; editing by Ben Klayman and Matthew Lewis)

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button