It’s been a truism the past 15 years in eCommerce (call it the Prime era) that consumers value free shipping much more than fast shipping.
Amazon was able to win, of course, because it could do both. Most retailers just tried to match the free part, to the detriment of their bottom line… and the benefit of their conversion rate.
Pandemic we saw the height of DTC and eCommerce only businesses, but higher interest rates and the pullback in easy money has also put a hurt on free shipping.
Remember when we thought we needed companies to give us groceries in 10 minutes?
In this situation, the best way for retailers to reduce their shipping costs is with better inventory placement. This reduces the number of shipping zones to the consumer, reducing your parcel cost naturally.
Target and Walmart are pushing the boundaries of delivering digital orders from a traditional store infrastructure.
Free shipping thresholds have also gone up as a result. This leads consumers to keep searching for deals in an environment where any extra margin can be hidden in a price increase.
Will free shipping return or is it gone for good?
Interesting, don’t believe it will be gone for good - here in the UK (depending on what is ordered) small parcel carriers deliver in the same time as Royal Mail, who are primarily the defacto Free shipping courier for online retailers. Therefore there is little incentive for customers to opt for premium options. Agree, we have also seen the thresholds to qualify for free shipping increase. Different story naturally over the pond in Europe - however have seen German / Austrian / Swiss customer preferring to pay for a named courier as the trust value really comes into play here. Differing results in France / Italy / Spain where there has been a real increase in pick up locals as national post services are a little…crappy. Feel the free shipping question will always be nuanced by product / location etc.
I would say the share of carrier for free shipping in the UK is more evenly split.
Sure, Royal Mail has a chunk, Evri (Hermes) has a chunk (and is the carrier most promoted by eBay as well, with RM/PF second), with lesser amounts going to Yodel (similar QoS as Evri) and DPD, DHL ground (more typical for higher value orders) having a small percentage share
Guess it depends on what sector you work in Miles, certainly eBay pushes EVRI - but I can’t see anyone selling small mass market components / consumables using any of the named couriers. They can’t compete on RM’s pricing. But then I’m not here to argue courier market share - more make commentary on the future of Free shipping
Agreed, whether free shipping continues will depend on costs of the courier and core margin of the product being shipped. The first increasing and the latter decreasing.
And yes RM is very cheap at the small & light end of the scale, and also for certain destinations. Apparel and larger general merch? Evri is usually the cheapest on a corporate contract although the QoS can create reputational issues for the retailer so may be a false economy; bigger shippers can usually get a good deal from DPD (who are also good at more premium deliveries).