Is It Time For Free Shipping?
As I started to write this, the House of Representatives had failed to pass the Bailout Bill, adding one more giant dent in consumer confidence.
Luxury retailers have finally starting feeling the pain that other retailers have been experiencing. Neiman Marcus posted a $35.7 million loss for the quarter ending August 2, and warned that the American luxury market is likely to be hit hard as wealthy and upper-middle class consumers change their attitude towards spending.
Last week, FedEx said it “expects U.S. consumers will remain hesitant about spending in the months ahead and that the weakening world economy will continue into 2009 signaling a second consecutive lackluster peak season for transportation companies this fall, according to the Wall Street Journal.
At the same time, FedEx announced it will increase shipping rates by an average of 6.9% for U.S. and U.S. export services, effective January 5, 2009, reflecting the company’s need to squeeze more revenue from customers due to the continued shipping slowdown and high fuel costs. (These rate increases typically affect retail customers and small to medium-size businesses, with major customers getting substantial discounts.)
With all this in mind, we’ve been monitoring this year’s trends toward offering free shipping. The National Retail Federation’s Shop.org says 8 out of 10 online retailers offered free shipping during the past two holiday seasons, up from 60% in 2004. In just the past couple of weeks, we’ve seen catalogs from the following companies offering free shipping, some with certain restrictions:
- Sears Leather Collection – free shipping
- Cheryl & Company – free ground shipping
- Office Depot – free delivery next business day, local delivery areas, orders over $50; fuel surcharge may apply
- Terry’s Village – free delivery (ground) – orders over $60 – by Oct. 9
- Oriental Trading – free shipping (ground) – orders over $60 – by Oct. 16
- Lillian Vernon featuring Lilly’s Kids – free shipping (standard delivery) – orders over $59 – by Nov. 15
- Current Kids – free shipping – with orders over $50 – by Oct. 31
- Collections ETC. – free shipping – orders over $50
- Rhode Island Novelty Importers – free delivery – orders over $50 – by Oct. 10
- Miles Kimball – free shipping – orders over $40
- L.L. Bean customers and VISA card – free shipping and returns
- Doheny’s Water Warehouse – pool supplies delivered overnight free
We hate giving up margin with free shipping. We all know either we pay or the consumer pays. But maybe it’s better to use free shipping to try to entice customers in what is surely one of the bleakest holiday seasons of the last 20 years.
Blog readers out there: What are you doing to generate orders for the holiday in this crucial 4th quarter? We’d like to know.
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