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Something for nothing: Ships for free

Once a bonus, online retailers are paying the postage to make the sale.

Article by: JOHN EWOLDT , Star Tribune

Updated: December 3, 2012 - 3:36 PM

For holiday shoppers, free shipping has gone from perk to priority.

Shoppers don't just like it. They increasingly expect it. So, at least for the holidays, online retailers are scaling back minimum purchases and other requirements that have accompanied free shipping offers of the past.

Nearly a third of online retailers plan to offer free shipping without any conditions at all this holiday season, according to the National Retail Federation.

Many see no other choice, said Luke Knowles, founder of freeshippingday.org. "If a competitor offers it, you have to do it," Knowles said. "It's the No. 1 promotion that shoppers respond to."

Indeed, 85 percent of shoppers prefer free shipping without conditions to other promotions, according to MarketLive Inc., an e-commerce services company in Petaluma, Calif.

Policies have evolved. Several years ago, the typical promotion included a minimum purchase, perhaps $100, and a discount code provided by the retailer or found on coupon code sites such as Retailmenot.com. Then retailers started dispensing with the promotion code.

Chad White, research director at marketing software company Responsys, said that, last year, many retailers started offering free shipping with no minimum purchase in mid-December.

This year, many offered no minimums on Cyber Monday, including J Jill, J.C. Penney, Sportsman's Guide, Eddie Bauer, Home Depot and Bass Pro Shops.

Roxy Freese, owner of Bibelot gift shops in the Twin Cities, is offering free shipping for any order over $75 from Cyber Monday to Dec. 18. Not offering free shipping is not an option, she said, adding that it isn't a huge expense for her small business.

"It's what's done," Freese said. "We do it because our competition is doing it."

Best Buy expanded its free shipping this season to include no minimums on nearly every product through Jan. 2. "We see it as a way to delight our customers," said Scott Durchslag, president of Bestbuy.com. "We saw an increase in order value, too."

Target introduced free shipping last year for all Redcard holders, now a year-round promotion. This season, it's considering whether to expand expedited shipping at no additional charge on virtually all items from Dec. 12-19 for all customers, said target.com spokesman Eddie Baeb. Standard shipping policies will still apply.

Still, free shipping is a perk that discriminates against retailers selling bulkier, heavier items. It costs a jewelry retailer a lot less to offer free shipping than an electronics retailer shipping 50-inch flat screen TVs.

Durchslag said that, while free shipping can increase sales, for Best Buy it's also an investment. "It's a financial commitment, and we have to budget for it," he said. "But if the customer has a great experience they're more likely to return."

Surveys suggest that free shipping puts shoppers in a better mood, which may lead them to spend more. Where free shipping was offered last week, customers spent an average of $137 per order, according to the National Retail Federation. Without free shipping, the tab fell to $91.

Carol Miletti of Mound, a frequent online shopper who's on a first-name basis with her postal carrier and her UPS and FedEx drivers, said that lack of free shipping is a deal breaker.

"Anything I put in my cart stays there until they offer free shipping," she said.

In fact, more than half of shoppers will abandon their online cart if they have to pay for shipping, according to digital analytics company ComScore.

Next: Free returns

As free shipping becomes the standard, some retailers are taking it up a notch by offering free shipping on returns. It's highly popular with higher-end clothing or shoe retailers, which have high online return rates mostly from issues with fit.

Nearly 40 percent of clothing and shoes purchased online are returned, but retailers are realizing that free return shipping increases sales. It removes one of the biggest barriers to shoppers' purchasing apparel online, said Knowles, of freeshippingday.com.

Nordstrom offers free return shipping year round, and Saks and Neiman Marcus offer it during the holidays.

Iowa-based retailer Von Maur, which has a store at Eden Prairie Center, has offered free shipping from its stores since 1914, and started permanently offering free online returns Nov. 21. "Our customers can feel more confident buying with free return charges," said Melody Westendorf, chief operating officer.

Mid-line retailers such as Banana Republic, Gap and Old Navy are taking up the cause during the holidays, offering free return shipping for purchases of more than $50. Retailers such as Coldwater Creek and Lands' End are testing the waters by offering free returns for a limited time on selected items.

Some retailers are making free returns easier than others. Coldwater Creek requires a customer to get prior authorization. Von Maur has customers tear off the return label, put it back on the package, and call or go to FedEx for pick-up.

Cecilia Myers, founder and CEO of specialty apparel site Cakestyle.com, said that free returns were part of her business plan from day one in 2011. It's the Zappos model, where shipping and return shipping costs are built into the price. "It's peace of mind for the client."

Shoppers can quickly get used to free shipping and returns during the holidays, but experts say not to expect a widespread expansion of it just yet. The limited time incentives are mostly a "holiday only" kind of deal. "Retailers like to create a sense of urgency at the busiest shopping time of the year," White said.

Consumers holding out for a freebie can wait until Free Shipping Day on Dec. 17, when nearly 3,000 retailers are expected to offer free shipping. Delivery is guaranteed by Dec. 24 within the continental United States. "That's the most important thing," Knowles said. "Delivery before Christmas."

John Ewoldt 612-673-7633

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