There’s been a lot of talk in the online retailing business about when and under what circumstances retailers should offer free shipping. Many consultants say it should be used primarily to increase the average order. That’s just what Amazon is doing. It announced today that it will provide free shipping on orders that exceed $99 and that meet certain restrictions.
Amazon says the offer “is not a seasonal or limited-time promotion, but an indefinite, everyday, 365-days-a-year offer.”
Amazon's free shipping raises the bar once again for other online retailers, analysts say. "They're narrowing the ability of others to compete with them, and that's what it's all about," says David Taylor, research fellow with Connecticut-based consultants and researchers Robert Frances Group.
The free Super Saver Shipping includes purchases made from Borders.com, which Amazon operates. Eligible purchases are flagged with a truck icon. Customers must choose the option that allows Amazon to consolidate items into as few shipments as possible, meaning that shipments could be delayed if it is out of stock on an item but expecting replenishments soon. Furthermore, the offer does not apply to toys, video games and accessories, baby products, Target products, e-books and documents, software downloads, music downloads, gift certificates, or to items purchased from Marketplace, Auctions, zShops and Circuit City. It also does not apply to purchases from Target.com which Amazon operates for Target.
"Our improvements in productivity allowed us to lower book prices and now allow us to offer free shipping," said Warren Jenson, chief financial officer. "We expect that these money-saving initiatives for customers will continue to play an important role in our growth."
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