Amazon Quietly Lowers Free Shipping Minimum to Compete with Walmart

The competition among online retailers for free shipping got more heated last week, as Amazon quietly lowered its minimum shipping order from $49 to

Subscription News: Amazon Quietly Lowers Free Shipping Minimum to Compete with Walmart

Source: Amazon

The competition among online retailers for free shipping got more heated last week, as Amazon quietly lowered its minimum shipping order from $49 to $35 last week, reports The Verge. According to the Amazon website, for non-Prime members, all orders of $35 or more of eligible items across all product categories now qualify for free shipping. As before, orders of $25 or more of eligible books also qualify for free shipping. Free shipping includes receipt of a qualifying order in five to eight days. Prime members, however, get free shipping on eligible items with no minimum.

Subscription News: Amazon Quietly Lowers Free Shipping Minimum to Compete with Walmart

Source: Amazon

This news comes just weeks after Walmart abandoned its two-day shipping membership program, ShippingPass, to allow all online customers to get free two-day shipping without a fee. The terms set the minimum order at $35 and items must be sold directly by Walmart, rather than a Walmart marketplace seller, and be ordered by the 2 PM cutoff time. For non-qualifying items, Walmart will offer  free three- to five-day shipping. Before this, Walmart had experimented with ShippingPass, where members paid $49 a year to get free two-day shipping.

Subscription News: Amazon Quietly Lowers Free Shipping Minimum to Compete with Walmart

Source: Amazon

While it is no surprise that Amazon wants to compete with online retailer Walmart, it is interesting that Amazon made the change to its two-day free shipping program so quietly. Typically, Amazon is quick to issue a press release to make it known about new products, services or Prime perks.  This time last year Amazon raised the minimum from $35 to $49, according to CNNMoney, and now it is reversing that decision but not shouting the news from the rooftops.

At that time, an Amazon spokesperson told CNNMoney, “Our objective is to offer customers low prices, as well as convenient free shipping options, on the millions of products available on Amazon.com. From time to time, we review our shipping options.”

Free shipping, whether it is two days or more, is quickly becoming an expectation of online shoppers. Here are a few other companies with free shipping programs:

  • Best Buy – minimum purchase of $35
  • Target – minimum purchase of $25, also available free to Target REDcard customers
  • Zappos – no minimum order (owned by Amazon)
  • Kohl’s – qualifying purchases of $75 or more
  • Sephora – orders of $50 or more or free with a Sephora Flash membership ($10/year)
  • Apple – free two-day shipping on in-stock items, free next-day shipping on iPhones
  • Dell – free standard shipping on everything, no minimum purchase
  • Bed Bath & Beyond – free standard shipping on orders over $29

Kissmetrics says offering free shipping can be profitable, and it helps companies improve their conversion rates. They quote three case studies where offering free shipping increased sales between 16 percent and 90 percent. To find a company’s profitability threshold for profitability, Kissmetrics recommends split URL testing to (1) establish a baseline for conversion, (2) determine the appropriate minimum purchase to get free shipping, (3) test for free shipping only on specific items, and (4) test with higher product prices to improve margin.

Insider Take:

In terms of online sales, Statista ranks Amazon as the top online retailer for 2015 with $79.27 billion in revenue. Walmart is ranked fourth with $13.7 billion. Based on that data, it seems Walmart has a long way to go to overtake Amazon in the online retail space. Regardless, it is smart to not only keep up with free shipping trends but to set the pace for others. We expect to see more companies offer free shipping in the future, and others to test whether free shipping should be standard for its products or whether a membership option could help offset the free shipping offering and raise profit margins, as Amazon, Sephora and Bed Bath and Beyond have done.

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