No U-Turn on Road to Free Shipping

Now, isn’t this more like it? A real price war has broken out, albeit a limited one, with superpower Amazon and the more guerilla-style Buy.com squaring off over free shipping.

Both deals are good news for consumers. At Amazon, you have to buy half as much now — only US$49 — as the company used to require to get free shipping. At Buy.com, there’s no minimum requirement. With free shipping, you might have to wait a bit longer for your stuff than if you actually paid for it, but shoppers should be rejoicing everywhere.

Whether or not this trend spreads any further, consumers should take heart in knowing that there is no turning back on this road. Free shipping is here to stay.

Future Perfect

Think about it: Six months from now, Amazon evaluates its financial results and finds out it is losing money on the $49 deal. As a result, it tries either to raise its free-shipping threshold or, more likely, to make a compromise offer.

How’s that going to play in Peoria? Not so well.

Spoiled brats all, Internet consumers get used to tasty little freebies and don’t want to give them up. Hundreds of content sites found themselves in the cosmic dustbin after trying to make readers pay for what they once got for free.

No Expiration

So if shipping charges do reappear, they will slow down sales.

There isn’t a company on the planet, online or off, that can afford slowing sales. Not in this fragile economic environment, and definitely not heading into the holiday season, which is when Amazon’s “experiment” is slated to expire.

This means one of two things: Amazon acted in haste and will live to regret it — or we all can count on getting free shipping from now on.

Buy or Sell?

Buy.com spiced things up by putting all in, as they say in the poker world, betting the house that it can give away shipping for free.

It’s an interesting gamble and a daring ploy by an e-tailer that was on the death watch list less than a year ago.

Two companies don’t quite make a trend, of course — unless one of them is Amazon and the other has an undeniable knack for publicity and promotion.

Two Camps

Besides, Amazon and Buy.com are not the only two players in the shipping game. BN.com still has its buy-two-get-free-shipping deal. And Drugstore.com is offering free shipping for first-time buyers.

But the major online catalog retailers haven’t made a move. In a way, many of these retailers find themselves in a bind, since they rely on shipping charges to help their profit margins. Other online retailers, such as KBtoys and Petsmart.com,also have yet to make a move toward free shipping.

It could be that the online shopping world will split into two camps.In one camp will be companies that, because of the competitive environment in which they operate, have no choice but to find ways to offer free shipping; and in the other camp will be those that can insulate themselves from the free-shipping storm.

Pressure Cooker

Putting so much pressure on the shipping department will likely cause something else to give, like profits.

Sure, Amazon and other companies have driven down costs. But despite Amazon CEO Jeff Bezos’ mantra of always lowering prices, there is a limit to what any retailer can do without causing its profit calculator to spit out zeros.

Forget Profit

But so what? Let’s forget profits for a while. That seemed to work quite nicely the first time around. Without having to worry about profits, the e-tail world can again become all about the customer.

So sit back, order up some music and watch the war. You can feel satisfied knowing that whatever the outcome, shoppers will win.

What do you think? Let’s talk about it.