Brands step up free shipping game for holiday season e-commerce

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Retailers offer free shipping to cash-strapped consumers in weak economy
Retailers offer free shipping to cash-strapped consumers in weak economy

This holiday shopping season could finally make free shipping the norm among multichannel retailers — and free returns could be next. A Synovate survey from Web marketing firm SteelHouse found that 31% of shoppers said they will not buy a product online this holiday season without a discount or free shipping offer. Forrester Research analyst Sucharita Mulpuru recently said free shipping has become "table stakes" for holiday sales.


"Decision making is fragile" in this weak economy, says Lew Paine, SVP of GfK Consumer & Retail. The market research firm found that 84% of consumers surveyed plan to spend the same or less this holiday as in 2010. Shoppers are looking for price and value this holiday season, and gravitating to free shipping and returns offers as more of them shop online. 


In its annual holiday shopping survey, Accenture found that the number of consumers who say free shipping makes them more likely to shop online has increased from 32% in 2008 to 74% in 2011. 


One-third of shoppers indicated in a Shop.org survey that they plan to do more of their holiday shopping online this year — and of those, 36.3% said it was because of free shipping offers. Only the convenience of shopping 24/7 and avoiding the crowds at malls were more influential in moving consumers to shop online. Meanwhile, the National Retail Federation found that shipping charges were the main factor keeping consumers from spending more online.


More retailers are getting into the free shipping game. Sears Holdings Corp. announced in October it would offer free shipping on holiday orders over $99 via Sears.com and $49 via Kmart.com and Mygofer.com.


The free shipping trend is growing for a variety of reasons. Cash-strapped consumers have signaled they need a break. Also driving the trend are rising online sales by multichannel retailers offering the option of free in-store pickup, and the transparency of prices as more consumers are comparison shopping online. 


Shipping charges "have become the 'anti' for being in the online space," says Christopher Donnelly, executive partner of Accenture's Retail Practice. 


Retailers like Zappos.com, which offers free shipping and returns with no conditions, "have kind of thrown down the gauntlet," says Fiona Dias, chief strategy officer at ShopRunner, an online marketplace that features merchandise from retailers including Toys "R" Us and American Eagle Outfitters and that offers free shipping and returns year-round. Her company's policy may well become the wave of the future. "Free shipping year-round is inevitable," says Dias. 


Among retailers upping the ante is Nordstrom, which in August extended free shipping on all orders year-round with no minimum purchase. The upscale retailer had previously offered free shipping only on orders of more than $200. "It was about trying to do a better job of responding to customers' changing expectations," says Nordstrom spokesman Colin Johnson. 


Programs such as Amazon Prime have trained shoppers to see free shipping not as a discount but as a given. "The whole mindset about it has changed," says Paine. 


Donnelly adds that free shipping "does become more and more the expectation. I think we're probably well past the tipping point."

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