
Even before Wal-Mart’s surprise move, shipping prices were this holiday season’s predicament for online retailers. In a bid for cost-conscious consumers, Target and J. C. Penney introduced their most aggressive free-shipping programs ever, and Sears, Toys “R” Us, Williams-Sonoma and others were trying to match the success of Amazon’s shipping program, offering unlimited two-day shipping for an annual fee.
But given Wal-Mart’s scale and influence in the marketplace, its free pass for shipping sets a new high — or low — in e-commerce. And it may create an expectation among consumers — free shipping, no minimum, always — that would make it harder for smaller e-commerce sites to survive.
Wal-Mart says it will not raise prices to offset shipping and will not press shippers, like UPS and FedEx, to absorb the costs. But Wal-Mart and other big retailers already have low-price contracts with shippers, and the stores maintain distribution centers nationwide that reduce shipping distances and costs.
For smaller retailers and Web sites, which pay regular mail rates and may ship from only one location, free shipping is not nearly as affordable and often must be added into prices.
“You’re trying to compete with the Amazons and the Zappos, who have so many different warehouses that they can significantly reduce transport costs,” said Gary Schwake, director of business development at the Distribution Management Group, a consulting firm that advises retailers like Eddie Bauer.
Retailers say that shoppers have already started to revolt against shipping fees. While consumers are sensitive to what an item costs online, shipping costs can have even more influence, according to market research.
When e-commerce took off a decade ago, free shipping was a rare perk. Now, 55 percent of consumers are at least somewhat likely to abandon their purchase if they do not get free shipping, according to comScore, the online-research firm, and about 41 percent of transactions online now include free shipping (usually with a minimum purchase).
Wal-Mart is throwing itself into the holiday season shipping fray as it tries to revive sales. Even as other retailers’ sales have recovered, sales at Wal-Mart’s stores in the United States open more than a year have fallen for five consecutive quarters. Recently, it has been adding to the merchandise it carries, offering products for under $1 and undercutting Target on toy prices.







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