OPINION

Amazon’s Slow, Painful Dip in the Free Shipping Pool

Well, that pretty much does it. Amazon has to be done slashing its free-shipping threshold. Going from US$99 to $49 made sense, and the move from $49 to $25 is logical, too. But thats the end of the road.

From here, all that remains is the final, inevitable step: Amazon has to go all the way and just call it free shipping already.

Of course, Amazon could continue its death-by-soft-blows approach for a long time. Half of $25 is $12.50, then $6.25. At the rate the company is going, by the end of next year youll get free shipping if you spend 19 cents or more.

Sounds silly, right? Thats because it is. Sooner or later, Bezos & Co. will have to surrender the nickel-and-dime approach and take the Buy.com plunge: free shipping for everyone (see extensive disclaimer).

Right To Reverse

Amazon has reserved the right to reverse its course. It still cautions that it might drop this “long-term test” outright at some future date.

Oh, really? When might that be? The current test is supposed to run for three to six months. Three months puts us in November, in the heart of the holiday season. Does anyone really think Amazon will give people a reason to go elsewhere during that time?

I didn’t think so. Calling a halt to free shipping in early 2003 would make more sense. Presumably, Amazon will have turned another profit by then and will be better positioned to call its own shots. Who knows? By then, its thorn-in-the-side competitor, Buy.com, might have shot all the bullets in its holster.

But that’s unlikely. I don’t see Amazon getting any easy outs. It’s going to have to fight its way out of this little skirmish. And there are limited exits.

Exit, Stage Wrong

Amazon could, of course, announce that it is giving up on the shipping discount experiment. It would have to do so in conjunction with a new pricing offer to keep customers from freaking out. A free mug, maybe. Anything.

Most e-tailers would take a body blow on the way out, but Amazon has a way of falling down and scraping its knee, then jumping up and getting right back into the race. It’s one of the hallmarks of the only true e-tail bellwether that it hasn’t yet torpedoed itself like so many of its onetime contemporaries did.

Still, the psychology of free shipping makes this deal a tough web to unweave. Imagine if the Internet had begun as a fee-based medium and then, after a while, everything became free. Then imagine going back to fees again.

Customers have expectations, and right now, they expect to be able to plug in a zero under the shipping line when they get to the checkout, at least more often than not. That’s not going away. So if Amazon plans to escape by going out the way it came in, it will have to proceed with extreme caution.

Exit, Stage Right

Alternatively, the company could just bust down the imaginary wall it seems to be resisting. Only Amazon knows for sure what would happen to its margins if it were to dump shipping charges altogether, but my guess is that it’s almost doable. After all, Amazon has been marching, seemingly with confidence, in that direction since last year.

The fact that the company hasn’t yet done so only underscores how big a leap — albeit backward in many ways — completely free shipping would be. Still, it’s the only logical outcome of the progressive approach Amazon has employed so far. Why not take the plunge?

Amazon will, I think, and before very long. But it will do so only after sending a few more teams of divers down to make sure the water’s safe. At the rate Amazon is going, it will be another couple of years before it wades all the way into the water, which is where consumers want it to be and — make no mistake — where Amazon wants to be as well.

Why not just let go of the ladder and jump right in?


Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


3 Comments

  • And why shouldn’t consumers expect free shipping? After all, wasn’t one of the promises of ecommerce lower prices due to lower overhead? No high-priced retail space in city cores or suburbs to pay for, no middlemen? Then what happened? Most items on-line are the same price on-line as in the stores. Then when you checkout, you find you have to pay shipping as well. The only perceivable benefit then of ecommerce is the convenience of not having to leave your home.

      • jpecas asks: And why shouldn’t consumers expect free shipping? After all, wasn’t one of the promises of e-commerce lower prices due to lower overhead? …Yes, but IMHO the lower overhead has been offset by an inefficiency in turning inventory. Why? Because in stores, consumers can easily receive their merchandise; but in e-commerce, if people aren’t home when the delivery guy arrives (and most won’t be), then the ability to easily "receive" is gone. So as a result: most consumers won’t even order in the first place, and in turn, most e-tailers won’t turn their inventory fast enough to offset their lower overhead.

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