Amazon Prime has 40 million members in the U.S., suggesting that speedy delivery is a priority for most online shoppers. Yet, the majority of big box brands take four to six days to ship items to consumers.
But Amazon’s fulfillment strategies are costly. The online retailer spent $6.6 billion on transportation services and collected just $3.1 billion in shipping fees. Even though Big Box brands have chosen not to compete with Amazon in speed, most have a conditional free shipping strategy to match Amazon on shipping costs without draining capital. 79% of brands in L2’s Digital IQ Index: Big Box offer free shipping and 59% require a minimum.
Even that approach has not been without challenges. Best Buy recently increased its free shipping minimum from $25 to $35, suggesting the previous number did not cover costs. There is no easy cost-effective fulfillment solution. Forgoing free shipping or installing sky-high minimums is not an option either, as half of U.S. consumers abandon their carts if they don’t qualify for free shipping.
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