Retailers Cutting Back on Offers of ‘Free’ Shipping

Retailers are reportedly adding a lot of footnotes to their offers of “free” shipping.

Companies are raising the threshold in terms of order size required for free shipping, reducing the speed of delivery, adding fees for those who want to get their items faster and raising the prices of subscriptions that include free shipping, Reuters reported Friday (March 24).

Merchants are also increasing the prices of their products to cover the cost of free shipping or even eliminating their offers of free shipping, according to the report.

These changes have come in response to a number of trends that are impacting the businesses that have been offering free shipping, the report said.

The pressures upon these businesses include the rising costs of both products and shipping, the slowdown in the growth of eCommerce, and uncertainty in the face of a potential recession, per the report.

Sources told Reuters that reducing shipping costs is merchants’ No. 1 goal and that retailers aim to cut their shipping costs by as much as 25%

As a result, they’re working to shift the cost of shipping to their customers, even though consumers have come to expect free shipping, according to the report.

Still, three-quarters of eCommerce firms offer free shipping — although in many cases it is with one or more of these limitations, the report said.

As PYMNTS reported in September, retailers are also revisiting their offers of free returns, with some beginning to charge a fee when customers return items they have purchased online.

Here, too, the change is being driven by an effort to reduce costs.

PYMNTS research has found that for consumers who are seeking to cut costs wherever possible, the extra cost of shipping may be enough to turn them away.

That is especially true among consumers who have come to expect free shipping options, according to the “2023 Global Digital Shopping Index: How Digital Can Help SMBs Punch Above Their Weight,” a PYMNTS and Cybersource collaboration.

Among all cost-cutting measures, the dropping of free shipping is one that could have a particularly strong impact on repeat business, the report said.