News will no longer charge shipping fees

March 24, 2011 01:22 PM

L.L. Bean Inc. is raising the stakes in the free shipping war.

The web and catalog retailer of outdoor gear and apparel announced today that it will ship all orders for free to U.S. and Canadian shoppers, regardless of the amount ordered. It’s a policy that’s been tried by a few online retailers, notably shoe merchant, but not many.

"We tested free shipping offers with no minimum purchase for several months and the customer response was overwhelming," says Chris McCormick, president and CEO of L.L.Bean, No. 24 in the Internet Retailer Top 500 Guide.  "Our customers want and value free shipping.  It's our opportunity to offer free shipping for all U.S. and Canadian customers with no minimum purchase, no end date, no conditions—guaranteed." The new free shipping policy takes effect tomorrow.

The retailer had been offering free shipping with no minimum purchase as a limited-time promotion and as a benefit to consumers who signed up for the retailer’s cobranded Visa credit card. L.L. Bean now will increase the benefits to holders of its Visa card by doubling rewards on purchases made with the card. Cardholders will earn 1% in rewards on all purchases with the card, 3% on L.L. Bean purchases and receive additional benefits such as free monogramming and free returns.

“It’s not shocking,” says Lauren Freedman, president of The E-tailing Group, of Bean’s move. “Retailers know consumers pull the trigger when there’s free shipping.” She notes 7% of the 100 leading online retailers offered free shipping on all orders in The E-tailing Group’s annual mystery shopping survey in the fourth quarter of 2010, up from 4% the year before.

Retailers increasingly are viewing free shipping offers as a marketing expense, just as they would an ad campaign, Freedman says. “It’s a cost of doing business,” she says. “They know they have no choice but to deal with it, especially if they’re in a competitive category. And they’re probably offering it three or four months of the year anyway.”

L.L. Bean’s move is the latest example of a retailer seeking to address online consumers’ penchant for free shipping. Macy’s Inc., for example, made free shipping standard in January on orders of $99 or more. Inc. has put pressure on other online retailers to eliminate shipping fees with its Amazon Prime program, which offers free shipping on all orders for a $79 annual fee. More than 60 retailers have signed up to offer a similar $79-a-year free shipping program called ShopRunner from GSI Commerce Inc., an e-commerce technology and service provider.

Amazon, which owns Zappos, is No. 1 in the Internet Retailer Top 500 Guide; Macy’s is No. 20.




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