Retailers Race to Bottom of Free Shipping Spending Requirement

Amazon lowers threshold to $25

A UPS delivery man gives a thumbs up as he leads a line of UPS trucks out of a UPS depot in New York City. Stephen Chernin/Getty Images

Never underestimate the role shipping plays in e-commerce. Walmart and Amazon have been vying to become the habit-forming online retailer for American shoppers, and Amazon has enjoyed a comfortable first-mover advantage for much of that time. The two have engaged in rival shopping-event days (Walmart rolled out a huge sale in response to Amazon’s made-up Prime Day holiday), rival grocery services, rival subscription-goods services, and a race to the bottom of how little consumers have to spend to get items shipped for free. In the latest move, Amazon.com lowered its free shipping threshold to $25 from $35, lower than Walmart.com’s minimum purchase for free shipping by $10.

So what? For consumers, free shipping for a package en route is nice, but they may begin paying attention to the cost of returning a package. Amazon offers free returns on the clothing and shoes orders it fulfills, but if you’ve purchased an item fulfilled by a third-party vendor, you’re at the mercy of the vendor.

A cursory survey of clothing or shoe offerings shows free returns are clearly marked on Amazon fulfillment, while third-party fulfillment and return policies require an extra click or two. Walmart.com has a similar policy—and the added advantage of having a network of stores that shoppers can walk in and items for quick returns, refunds and exchanges. This will be great for suburban, exurban and rural e-commerce customers: One of the appealing traits of e-commerce is its ability to deliver stuff that’s hard-to-find in your area. But if that hard-to-find stuff is not to your liking, being able to return it should be nearly as frictionless as buying it was.

Who cares? Environmental types have their eyes on e-commerce as a whole. Emissions nightmares from idling delivery trucks aside, e-commerce has disrupted traditional supply chain models—everything from inventory management and storage to packaging to fulfillment to returns. There are opportunities at every link in the chain to adopt sustainable practices. For example, changing the packaging can reduce overall resources consumed and the number of damaged deliveries and returns for the retailer. Here’s how luggage maker TOM BIHN does it:

The company now uses shipping boxes made of recycled cardboard that are right-sized to prevent the use of excess materials and crush tested to prevent product damage, as well as to reduce the rate of return shipments. Additionally, TOM BIHN ships every order via UPS carabon neutral, where carbon offsets are purchased to balance out the emissions produced by the transportation of shipments. 

There is no blithe assurance that e-commerce is actually better for the environment. Experts are still balancing the packaging and transit demands against the transit resources used when people drive to stores to get stuff and the new supply chains and inventory practices against the way retailers used to operate. The shipping wars among e-commerce players present opportunities for consumers to get their goods cheaply and for retailers to grab a larger share of regular spenders. They may also be a surprising prompt to look at the logistics systems that undergird modern American life.

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