retail news in context, analysis with attitude

USA Today reports that many online retailers are expected to follow the pattern of recent years and offer free shipping during the run-up to the end-of-year holiday season.

“With consumer confidence skirting historic lows and most retailers' sales flat or slipping, shipping promotions might be as necessary as they are costly,” the paper writes. “Many consumers turn to online shopping for convenience or to save on gas. If retailers charge them more for shipping because of fuel surcharges, it could offset the money consumers save by shopping online.

“More than 40% of people who abandoned their online shopping carts said they did so because of high shipping costs, according to a recent survey by the online payment company PayPal. Nearly 60% of those polled by BIGresearch said free shipping was a ‘very important’ factor in their decision to shop online. The National Retail Federation's digital division, Shop.org, says eight out of 10 online retailers offered free shipping during the past two holiday seasons, up from about 60% in 2004.”

KC's View:
One of the things that USA Today notes is that retailers offering free shipping will be looking for ways to reduce their own costs, either by configuring shipments differently or adjusting their transportation infrastructures.

The other option, of course, is reduced profitability. But that may be a price that online retailers have to pay for continued viability. After all, it is unlikely that the economic downturn will last forever…and e-marketers have to keep their eye on the long-term prize.