As the holiday season approaches, retailers are decking their virtual halls with promotions to woo customers away from Amazon and Walmart. Best Buy announced last week that it would waive its $35 minimum for free shipping between October 25 and January 2. That’s a clever strategy, but L2’s Insight Report: Omnichannel Shipping & Fulfillment suggests that the retailer will need to use it sparingly to maximize its effectiveness.
Amazon has raised the bar for e-tailers, making free shipping an expectation rather than a perk. But while Amazon is able to sustain free two-day shipping with Prime membership fees, the service can be costly for retailers that do not charge such fees. Still, free shipping appears to be the price of entry for brands hoping to compete with Amazon, as all mass price point brands in L2’s Intelligence Report: Omnichannel Retail offer free shipping in some capacity.
To make free shipping work for them, brands need to leverage the service strategically. One way to do this is by setting minimum thresholds – as Best Buy typically does – to motivate customers to load up their baskets. The L2 study finds that this is a common strategy. Although nearly 80% of brands offer free standard delivery shipping, only 23% make the service unconditional and 55% require an average threshold of $94.34.
Brands can also use limited-time shipping deals to create a sense of urgency, as Best Buy is doing. By promoting the deals through email and social channels, the electronics retailer can maximize their effectiveness. For example, Abercrombie & Fitch uses most of its emails to promote limited-time free shipping, but does not list the service as a regular option on its Shipping & Handling page – making shoppers feel like they need to take advantage of the offers before they disappear.