Is Free Shipping A Thing of the Past?

Free shipping has gone from an exciting perk to a customer expectation over the last few years, in no small part due to Amazon.com. Now, thanks to inflation and spikes in shipping costs, retailers including Amazon are dialing back free shipping policies to maintain profit margins.

Amazon, which was once able to eat the costs associated with free shipping through a combination of Prime subscription dollars and profits from other divisions like AWS, is increasing minimum purchase thresholds and adding fees on some of its more speed-oriented delivery options, according to Reuters. Amazon Prime members in municipalities with free same-day shipping, for example, must pay $2.99 for shipping on orders smaller than $25.

Others including Foot Locker, Zara and Abercrombie & Fitch, are making cost-saving alterations to their free shipping schemes. Digital Commerce 360 found that, as of last August, nearly three-quarters of the top 1,000 U.S. retailers offered some form of free shipping, with 45 percent requiring a minimum purchase.

While backing away from free shipping may be the only option for some, the service still demonstrates the ability to get customers to buy and provides a perceived competitive advantage. Kohl’s revamped its free delivery offering making it available on orders larger than $49, down from $75, which led to an increase in conversions.

Amazon has also rolled back at least one other Amazon Prime perk that was once a big selling point. In addition to a recent increase in the cost of a Prime membership from $119 to $139, Amazon no longer guarantees two-day shipping on all orders, according to The Penny Hoarder.

Shipping is not the only place where retailers have been dialing back customer perks due to rising costs and the need to make margins. Dunkin’, Chick-fil-A and Starbucks have all recently raised the threshold for rewards program members to get free products with accumulated points, according to an Insider Intelligence report.

• Amazon, other retailers revamp 'free' shipping as costs soar - Reuters

• What should the free shipping threshold be? - RetailWire

• Amazon Prime Doesn’t Guarantee 2-Day Shipping Anymore - Do This Instead – The Pennyhoarder

• Chick-fil-A joins Starbucks, Dunkin’ in raising threshold for free rewards - Insider Intelligence