Target lowers the bar for free shipping

Industry News

While some merchants have pushed toward unconditional free shipping as a way to woo customers, others are simply offering the perk on purchases that cross a specific threshold. Among the top 25 retailers, Nordstrom is the only merchant that offers unconditional free shipping.

While many of the top sellers are unwilling to match Nordstrom in that regard, they are willing to play with free shipping thresholds. In the past few years, some have actually increased the threshold. Amazon, for instance, moved the bar up to $35, while still offering unconditional shipping to Amazon Prime subscribers.

Among the top 25 retailers, Nordstrom is the only merchant that offers unconditional free shipping.

Target, on the other hand, has been edging the free shipping threshold downward. Last June, the company set the threshold at $50, with the exception of heavy or oversized objects. Now, the company has knocked that figure down even further, offering free shipping to customers with order values of $25 or more, Internet Retailer reported. Of the top 25 merchants, Target now has the lowest free shipping threshold (excluding Nordstrom), which gives the retailer a specific edge over the competition.

“We saw an enthusiastic response to our free shipping offer over the holidays,” Jason Goldberger, president of Target.com and Mobile, told the news source. “Now, whether guests are stocking up or doing fill-in shopping, we’ve enhanced our year-round shipping offer to be one of the best in all of retail.”

Of the top 25 merchants, Target now has the lowest free shipping threshold.

This is the latest move from Target to encourage more customers to shop online. The retail chain also recently deployed a curbside pickup initiative for online purchases, allowing shoppers to pick up orders made online without ever having to leave their own cars.

Keeping up with the free shipping trend

Merchants hoping to keep up with the big-name retail brands will have to find one way or another to compete with stores such as Target. This may mean getting competitive with free shipping.

Sellers should take into account factors such as total orders, average price, average profit margin and total cost of shipping.

Fortunately, while many customers do not like paying for shipping, the fact of the matter is that they still expect it on most orders. Retailers just need to identify the price point at which it makes the most financial sense to offer free shipping. When calculating this figure, sellers should take into account factors such as total orders, average price, average profit margin and total cost of shipping – this should give them a good estimate of where to set the bar.

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