Free Shipping Is Bean's Holiday Gift
The holiday sweetener by L.L. Bean, Freeport, ME, contributed to a rise of 50 percent in online orders and 20 percent in phone orders Dec. 1 over the same day last year.
"That is interesting in itself because our peak day in e-commerce tends to occur toward the middle of December," spokesman Rich Donaldson said. "For that peak day to happen this soon tells us there's been a generally favorable response. But it also bodes well for the holiday season overall."
Another plus is that extra order volume created by the offer helps make up for the fewer days between this Thanksgiving and Christmas compared with last year.
"Last year on our peak, we shipped 115,000 packages a day," Donaldson said. "I think we'll surpass that this year, if not this week [week of Dec. 2].
"Certainly, if you go about working in a free shipping offering," he said, "you do a break-even analysis in terms of what is going to be the impact on the bottom line in the operational areas and what kind of volume do you need to generate in order to make it pay for itself. So we did all that, and we felt very confident with the decision we made."
The offer was mentioned in e-mails sent to Bean's customer base. Catalogs dropped for in-home delivery on Thanksgiving weekend also carried it.
FedEx, which handles 80 percent of Bean's purchase volume, delivers in three to five business days within the contiguous United States. The U.S. Postal Service handles the remaining orders. FedEx delivery typically adds $4.50 to $11.95 to customer orders.
Bean's offer has no minimum purchase restriction, setting it apart from many other direct marketers. It is applicable to all apparel, accessory and footwear items in its catalog and llbean.com site. The cutoff date is Dec. 22.
Lands' End, Bean's closest competitor, is not offering free shipping for the holidays. It charges $3.95 to $11.95 depending on the order amount for United Parcel Service delivery.
Other direct merchants offer free shipping but typically qualify it. Amazon's offer kicks in for purchases over $25, for example, and Barnes & Noble.com's deal is for two items or more shipped together. Fragrance retailer Sephora has a $75 minimum for free shipping and gift-wrapping.
Others have an even higher threshold for free shipping: Eddie Bauer, Saks Fifth Avenue and Victoria's Secret offer it for orders exceeding $100. Ralph Lauren's Polo.com and AnnTaylor have $125 price points. Neiman Marcus requires customers to dig deeper into their pockets: $150 and up.
Then there are exceptions. Watchmaker Fossil offers free second-day shipping along with a music CD. Handicrafts site Novica will ship certain items for free.
Bean says that its offer is not a form of paying for customers.
"I wouldn't say this is a loss-leader program by any means," Donaldson said. "This is just a way to gain some comparative advantage in a competitive selling season."
Bean was one of the last holdouts among direct marketers when it ended free shipping in fall 1991. Only Bean's Visa credit cardholders are now entitled to year-round free shipping and monogramming. Their enticement this holidays is double coupon dollars on orders exceeding $90.
Even with more anticipated order volume this holiday season, revenue this year is on track to meet last year's numbers, $1.1 billion.
"Like for everybody else, it's a very competitive, inflationary retail environment, and that has been compounded by a fair amount of lack of consumer confidence," Donaldson said.
"That's been reflected in a fairly volatile fall season for us. Things will be looking rather bleak for a couple of weeks, and then we'll see the positive side, and then things will drop off again. That volatility speaks to all of those environmental concerns that were reflected within retail."