Home > Leadership > Free Shipping: A New Twist on an Old Marketing Tactic (Price Reductions)

Free Shipping: A New Twist on an Old Marketing Tactic (Price Reductions)

“Free Shipping unlocks shopping frenzy for online buyers!!!”

Free shipping! Free shipping? It was one of the major strategies to drive online retail sales during the recent holiday shopping season. And it seems to have worked. 

According to the Wall Street Journal, web sales were up during the month of December between 12 and 18 percent from the previous year.  If not the deciding factor, it seems to have at least been a key factor in driving traffic. In contrast, in-store sales showed a modest increase of about 2 percent for the month of December.

International mega-retailer Wal-Mart took the lead in free online shipping, but they certainly weren’t alone. Toys R Us, Williams-Sonoma, Target and J.C. Penney (just to mention a few) also offered this no-charge incentive. And of course, Amazon.com has been offering unlimited two-day shipping for an annual fee for quite some time.

While shoppers may have been skeptical, it does not seem as though the cost of shipping was passed along to the consumer in disguise. Product prices remained steady and shippers like UPS and Fed-Ex were not pressured to absorb the extra costs, according to a recent report in The New York Times.

It’s not clear how this strategy of the giants affected smaller retailers. Companies that don’t have access to a vast inventory and warehouses like those of Wal-Mart or Amazon usually can’t afford to offer the same deals on free shipping.

So the big question is: What’s next? Will shoppers continue to expect incentives such as free shipping? Or was the recent success more a sign of a swelling economy? Only time will tell.

Steve Nave, senior vice president and general manager of Walmart.com, told The New York Times that it’s a trend that he predicts will turn into a standard. “I would expect to see us continue to have offerings similar to this in the future in some way, shape or form,” he said.

So, bottom line, free shipping for the holidays appears to have been a successful “temporary” price reduction tactic that might not be so temporary.

What do you think?

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Categories: Leadership
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