1. adjustment policy
As costs continue to rise and e-commerce profits gradually decline, retailers are going to hold on.
In order to shift more costs to consumers and reduce lost profits, other retailers such as Amazon have made changes to free shipping services. For example, increase the service cost of fast delivery, raise the threshold of free delivery, etc.
currently, from Amazon to pet food retailer Einstein Pets and clothing chains such as Zara, Abercrombie & Fitch and Foot Locker are shifting some of the cost of delivery to consumers. In response, Mingshu Bates, chief analytics officer at consulting firm AFS Logistics, said this would help retailers reduce shipping costs by up to 25 per cent.
in the past, retailers have generally subsidized the cost of free shipping by raising the price of their products, and consumers know it. As a leader in free shipping, Amazon supports its delivery costs by charging Prime membership fees and lucrative profits from other businesses, and many retailers are beginning to follow suit, all offering a variety of free shipping services.
but in the past year, consumer demand has plummeted, product prices have risen and transportation costs have soared, making it difficult for free shipping services to continue. Even Amazon is struggling, not to mention the survival of other retailers.
As Cambridge Retail Advisors managing partner Ken Morris described, "the days of free shipping are numbered, and retailers are starting to act like airlines, charging for better seats and luggage transportation, and limiting frequent flyer points.
2. consumers under pressure
Adjusting the free delivery policy means that commodity prices may rise again, and consumers need to bear higher costs.
According to industry research firm Digital Commerce's previous survey, in the United States top 1000 retailers, nearly 3/4 of the retailers are part of the order to provide free delivery service, which has 45% of retailers with a minimum purchase amount to enjoy this service policy.
with the adjustment of the policy, the free delivery threshold will be raised again. Amazon, for example, has raised its service fees several times. Last February, Amazon raised the annual Prime membership fee from $119 to $139. In February, Amazon also raised the free shipping threshold for its fresh grocery business from $35 to $150, with shipping charges of $3.95 to $9.95 for orders below $150. And, the lower the price, the higher the charge.
It is worth mentioning that although retailers such as Amazon have raised the threshold of free shipping, some retailers have completely canceled the free shipping service. For example, pet food company Einstein Pets stopped free shipping last year and instead charged a flat fee of $8. Home furnishing retailer United Filter Co has raised the price of its furnace filters so that it can continue to offer free shipping on items sold through Amazon, Walmart and eBay.
this will further increase the economic pressure on consumers, and even many consumers complain of dissatisfaction. An Amazon Prime member user said that his Prime subscription service is to take a fancy to the free delivery service. If this service will be canceled, then there is no need to spend money.
can see that the cancellation of the free shipping policy can alleviate the cost pressure of retailers to a certain extent, but it will also have negative effects such as user loss and reduced customer loyalty. After all, many consumers in the choice of retailers for shopping, free delivery service is crucial.
Source: Cross-border Must Read