Merchant Innovation

Target Cuts Free Shipping Threshold In Half

Target announced in a Feb. 23 press release that it will be lowering its minimum threshold for free shipping to $25 from the original $50 level in an effort to expand its offerings of the “most compelling” offers in online retail. Also, to cope with the larger volume of online orders, and to improve shipping costs, Target also announced two new online fulfillment centers in Memphis, Tennessee, and York, Pennsylvania.

According to Target.com President Jason Goldberger, this came in a response to similar offers over the 2014 holiday season, suggesting a demand for the lower threshold year-round, among other incentives Target already provides:

“We saw an enthusiastic response to our free shipping offer over the holidays. Now, whether guests are stocking up or doing fill-in shopping, we’ve enhanced our year-round shipping offer to be one of the best in all of retail,” said Goldberger in the press release.

Free shipping was a focal point for stores during Black Friday and Cyber Monday last year, including some outlets that offered it without set minimums. Kurt Salmon reported that 78 percent of outlets offered some sort of free shipping incentive on Cyber Monday, including Target, with 51 percent offering the service with no minimum purchase order. For Target, the free shipping, as well as having 60 percent of Target.com traffic coming from mobile, contributed to what the company called a “strong digital performance” during the holiday season.

Aside from the shipping incentives, the holiday shopping season also saw Target expand its mobile shopping approach, with 2 million new users signing up for its coupon app Cartwheel, which has become a part of a company shift to integrate mobile shopping into brick-and-mortar activity with exclusive deals. To date, Cartwheel has over $1 billion in promotional sales since launch back in 2013.

These enhancements for Target’s online and mobile strategies are part of a general company overhaul that also included the hiring of former Tesco executive Mike McNamara as CIO, overseeing Target’s technological operations and enterprise strategy.

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