Amazon extends free shipping offer to purchases over $25
Stepping up competition as retailers head into the fall shopping season, Amazon.com today lowered its minimum purchase for free shipping to $25 from $49. The move comes just two months after Amazon slashed its free-shipping threshold to $49 from $99 -- a move followed by free-shipping offers from Buy.com and Niketown.com.
Amazon said it has seen "positive results" from its policy of offering what it calls Free Super Saving Shipping on qualifying orders over $49. It said it would now conduct a new 3- to 6-month test of the new $25 threshold. "In keeping with our continuous efforts to lower prices, we are testing this free shipping option to learn what works for customers," Amazon says on its web site.
Amazon clarifies on its site that the free-shipping offer requires an additional 3 to 5 days for delivery and excludes several categories, such as toys, video games, baby products, gift certificates and products sold in auctions and through Amazon by Target and other third-party merchants.
The free-shipping offer is not expected to hurt Amazon`s financial performance, which has led to recent quarters showing operating profits, analysts say.
"Their shipping continues to get better and better," says Safa Rashtchy, an analyst with U.S. Bancorp Piper Jaffray. "As they increase scale, they get better prices from distributors because they’re buying more from them." In addition, he says, Amazon is perfecting the art of injection shipping, in which it groups items slated for free shipping on single truckload.
As a result, he adds, Amazon should continue to decrease its fulfillment costs as a percent of revenue, "enabling them to continue to offer free shipping and be profitable."
Buy.com is offering free shipping on all orders, and Niketown.com is offering free shipping on all orders under a program it said is expected to last through the back-to-school season.
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