Target has undercut Walmart and Amazon by offering free shipping on orders of $25 or more.
Target dropped the minimum from $50 to $25 after consumers responded well to the company’s free shipping offer during the holidays.
Walmart’s minimum purchase for free shipping is $50 and Amazon’s is $35 (unless you have Amazon Prime, although Caporaso said you’re essentially paying for shipping upfront with that program, although Prime comes with other perks).
Amazon, which has two fulfillment centers in the area-Hamilton County’s Enterprise South and Cleveland-is ahead in the online shopping game, he also said.
“Everyone else is playing catch-up,” Caporaso said.
Target’s move is a play to grab more of the online shopping traffic. By lowering the threshold, they are opening up their online business to shoppers who make smaller orders.
Few people want to order something online and then pay the same amount or more to have it shipped. So a lower threshold makes shopping online at Target more appealing, Caporaso said.
Amazon used to have a $25 threshold but they raised it to $35, partly because of rising transportation costs, he also said.
“Amazon rarely goes backward, so it’ll be interesting to see if Amazon does go back to $25,” he said. “Or do they go to $20?”
But if you’re hopeful that companies will keep lowering their costs until everyone gets free shipping, that seems unlikely to Caporaso.
“Free shipping is a very hard model to make work,” he said.
But the power of the Internet means shoppers are only a click away from finding a better deal.
And when the competition is tight, shipping might be the deciding factor.
“Shipping [costs have] a visceral effect on people,” Caporaso said.
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