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Amazon’s New Weapon: Free Shipping For Small Items

The war is on! In a move to compete with Target, Walmart and eBay’s eCommerce platforms, Amazon is launching free shipping of small items less than 8 ounces and without a minimum order, BloombergBusiness reported yesterday (June 2). The delivery is estimated to take four to eight days for non-Prime members and two days for larger orders (over $35), even for non-Prime members.

This new offer comes only days after Amazon launched its Amazon Prime Now – a same day or one-day shipping service – in 14 metropolitan areas.

Amazon wants to attract low budget customers who are self-conscious about adding delivery costs to a $5 item. In its 13-week pilot project, Amazon told BloombergBusiness that the results were promising, with a clear increase of sales in cosmetics and phone accessories, for instance.

“Customers love that even if it’s a $5 item, shipping is free for everybody, Prime member or not,” Neil Ackerman, a senior manager at Amazon, said to BloombergBusiness. “Customers love it and sellers love it.”

The new free shipping offer is not expected to make Amazon more profitable, however. “Maybe the thinking is they can break even on these transactions and that’s all they really need to do,” said Sucharita Mulpuru, an analyst at Forrester Research Inc. “That fits the Bezos playbook.”

At Amazon, free shipping has been a weapon of mass customer attractiveness for a while now. The online retailing giant launched its first free shipping offer in 2001, the Super Saver Shipping, led by Maria Renz, who is now technical advisor to Amazon CEO Jeff Bezos. And it’s been a successful strategy thus far. During the 2014 end of the year holiday seasons, Amazon Prime experienced a record growth – with 100 million more items shipped for free compared to the previous holiday – while customers saved over $2 billion on free two-day shipping.

With Amazon Prime and other free-shipping-deals, the Seattle-based online retailer needs a new army to keep up with the increasing number of packages to be handled and delivered. And the surge in packages has called for more employees — with the company recently unveiling plans to add 6,000 full-time employees across the U.S. at its fulfillment centers.

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