The End of Free Shipping As We Know It?

Since today is National Free Shipping Day, we thought it was only fitting to discuss how free shipping is impacting today’s ecommerce space. Now, when you think of ecommerce, you almost instinctively think of free shipping. The perk nearly defines our online shopping experience and, as consumers, we’re more likely to hit “Buy” if free shipping plays a role.

But no matter how you look at it, moving items from Point A to Point B costs money. You’ve got fuel costs, labor costs and – if shipping with FedEx or UPS – residential delivery and other surcharges to factor in. If this past year has shown us anything, it’s that free shipping costs money.

Many ecommerce businesses have already increased the minimum amount shoppers must spend to qualify for free shipping. According to StellaService, Inc., a customer now has to spend $82 on average to qualify for free shipping, up from $76 last year. Check out this infographic that the Wall Street Journal created, showing the minimum spend of major retailers.

Wall Street Journal infographic showing the cost of free shipping by large retailers.

While a smattering of retailers still offer free shipping with no minimum charge, the majority are opting to impose minimums to protect their bottom line. Even Amazon has been making changes. Not only did they raise their minimum purchase price from $25 to $35, they also increased the cost of Prime this year (which offers free, two-day shipping) from $79 to $99.

This just goes to show that free shipping won’t always be as “free” as it is today – there will come a point at which more of the cost will be passed on to consumers.

So What Is the Future of Free Shipping?

All this data raises a question: will free shipping still exist in 2015?

I think it’s safe to say that it will, though expect to see it look a lot smarter. That means we’ll see more seasonal promotions for free shipping, and free shipping offers that are exclusive to loyal customers. Also, expect retailers to rely on a mix of shipping carriers in order to balance the cost of free shipping.

As The Wall Street Journal notes, the evolution of free shipping “is a sign that e-commerce has matured from a budding growth area into a core business that has to stand on its own.” Online retailers are finally getting a handle on how to offer free shipping in a way that’s both effective and lucrative for their ecommerce business. The coming year will serve to test their methods even more.

For ecommerce businesses looking to capitalize on the free shipping trend (without breaking the bank), check out our blog post on holiday free shipping tips.

 

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