Value proposition now includes free shipping

Free shipping for holiday purchases at Target.com will end in a few days, and when it does, a new era will begin regarding consumers’ heightened expectations of the online experience and whether they should have to pay shipping costs.

How retailers feel about the matter and their desire to recoup shipping costs will matter little, because an environment has been created where consumers will gravitate to the online retailer who best eliminates such points of resistance as shipping charges.

Consider the situation this holiday season where free shipping offers were widespread and used primarily as an inducement to get consumers to buy. Free shipping was offered early and often, as retailers sought to eliminate potential barriers to online spending because the outlook for consumer spending was challenging. That has proven to be the case, but now consumers don’t expect to incur shipping charges for items purchased online anymore than they expect to pay a supply chain surcharge to cover the costs of shipping products to stores or stocking shelves.

Shipping charges are reflected in the cost of goods sold in physical stores and eventually, that will be the case in the online space, because customers will demand it and retailers who don’t offer it will be disadvantaged. In addition, free shipping alone isn’t enough to get consumers to spend when other economic factors are in play. Even with the extensive free shipping offers that existed in the marketplace this year, sales have been difficult to come by. ComScore reported that e-commerce sales from Nov. 1 through Dec. 12 totaled $19.44 billion, essentially equal to last year.

“With Christmas now fast approaching, look for online retailers to continue to offer enticing last-minute deals, including discounts on expedited shipping, to spur a final wave of spending,” said comScore chairman Gian Fulgoni. “In fact, some retailers are even willing to offer free shipping as late as Dec. 18 this year, with a guarantee that the shipment will arrive by Christmas Eve. It will be interesting to see the impact that this offer has in terms of pulling additional spending from retail stores to the online channel.”