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Target offers free shipping and returns

August 3, 2015 01:02 PM
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For the next two weeks, Target Corp. will ship items bought on its website for free.

The retailer, No. 16 in the Internet Retailer 2015 Top 500 Guide, announced the promotion via an email this morning. The offer is good on shipping and returns on all purchases made through Aug. 15. Target has one of the lowest free shipping thresholds of all retailers ranked in the Internet Retailer Top 500. In February the retailer cut its free shipping threshold in half to $25 from $50, and executives say it produced almost immediate results, with e-commerce growing 37% year-over-year in the first quarter of fiscal 2015, ended May 2.

“The February launch of a lower $25 free shipping threshold drove a meaningful increase in conversion this quarter, and guests continue to embrace store pickup, which was up more than 100% from a year ago,” former chief merchandising officer Kathee Tesija told analysts on the retailer’s Q1 2015 earnings call in May, according to a transcript of the call obtained from Seeking Alpha. Tesija transitioned to an advisory role with the company last month.

With back-to-school representing the second busiest time of the year for the retailer, trailing only the holiday shopping season, a Target spokesperson says it makes sense to try and capitalize on that momentum.

"We know shipping costs are an important factor when it comes to shopping online, and believe this provides our guests another reason to consider Target the most compelling destination for back-to-school shopping," he says.

It's also not the only digital initiative the company is taking on to help drive more revenue from back-to-school shoppers. In mid-July, the retailer unveiled a School List Assist addition to its website aimed at making it easier for parents to buy their children’s school supplies online and pick them up in store or have them shipped to their homes.

This isn’t the first time Target has offered free shipping on all online orders. In October, the retail chain offered free shipping on all web orders placed through Dec. 20 in an effort to capture more holiday shoppers, a move executives said proved successful.

Target had debated offering free shipping for years, but worried the offer will eat into profit margins, Jason Goldberger, president of Target.com, explained in a keynote address in June at IRCE 2015, an e-commerce conference in Chicago. He said Target already was shipping two-thirds of its online orders for free, and knew that the cost of shipping was the main reason shoppers abandoned shopping carts.

“So we got rid of it,” Goldberger said. “The simplicity of the policy signaled to guests that shopping Target through the digital channel was simpler than ever, and sales soared.”

 

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