The news that has taken the e-commerce business by storm in recent times is the announcement from Target Corporation that it would offer free two day shipping during the holiday season. Until recently, Amazon was the only retailer in the western world to lead the online retail market with an unassailable lead. And, the holiday season is a very important period for e-commerce players as it’s one of the heaviest sale periods every year. This year, an ambitious pitch by Target is aimed to put it on a competing pedestal with Amazon. Target has announced that it would be adding more delivery and pickup options for online shoppers to have items shipped to their homes or ready for quick pick-up at local stores. They will offer free two day shipping on hundreds of thousands of items from Nov. 1 to Dec. 22 with no order minimum or membership. We can see that Target is finally jumping on the two-day shipping bandwagon.
Now, let’s look at the comparison, with the requisite numbers.
What is very important to note here is that Target’s 2 day shipping option initially came as a cheaper option than that of Amazon. As Amazon’s shipping deals are offered only to Amazon Prime members, Target decided to up the stakes. A Prime membership sets you back by $119 for a year. Walmart Inc, the other notable contender offers free two-day shipping for a minimum order value of $35. Meanwhile, Target plans to expand its Drive Up Service. This service from Target lets customers order online and have packages delivered to their cars by Target employees. Target currently handles 50 per cent of its online orders from store inventories and has plans to increase it to 90 per cent. This will come in handy when servicing orders from nearby Target stores, during the peak holiday season. So, all major players are interested in acquiring customers and retaining them with loyalty cards.
Amazon, not to be outdone at its own game, has now introduced free shipping for non Prime members too! Although it isn’t two day shipping and will take five to eight days to reach customers. The previous minimum order threshold of $25 is suspended till December, and the free shipping label has been stamped on more than three million items! Prime members get extra benefits, but this move has solidly thrust Amazon in the lead again, despite Target’s initiative.
Let’s look at what these cards mean, to the customers. Currently, the free shipping perk is available to all orders with Target that cross $35. But, there is no limit to holders of Target’s Red card credit and debit cards. These cards are free to purchase, unlike the Amazon Prime membership. The Red card also gets 5% off all orders. But, their shipping was a standard three-to-five day – shipping. But the holiday season will change that. The Red Card is the next Amazon Prime. It offers not just free shipping but also early sale access and exclusive product offerings.
Speaking of cards, Target has played its cards right, to facilitate the mammoth move. The retailer has had a lot of foresight to build a great infrastructure to ensure that it can handle the additional load. A year back, Target acquired Shipt, keeping this move in mind. Shipt can help deliver 55000 items the same day, in 200 markets. The newly promised offerings will be part of the “Target Run and Done” holiday promotional campaign. To figure out the logistics, Target is also hiring 120000 seasonal workers at $12 an hour. Furthermore, Target is capitalising on the bankruptcy of toy retailer ToysRUs. Not to be left behind, Walmart is also counting on the downfall of ToysRUs and is looking at the toy sector very seriously, this holiday season.
Expert predictions say that the U.S. holiday sales in 2018 will increase by 4.3 percent to 4.8 percent from a year ago. Ecommerce players are trying their best to leverage their infrastructure and get the most out of the holiday season 2018. Here’s how much holiday season sales have grown over the years.
The finer details say that Target will offer the free two day shipping scheme only to select zip codes. There is also another condition that states that the order will have to be placed before noon to be eligible for the offer.
As of now, Target is quite well matched with Walmart in terms of shipping and delivery. The new moves and promises strongly tell us that two day shipping is now the standard timeframe in which online shoppers expect their deliveries. Other players who do not catch up with this might lose business as customers will demand more options and quicker delivery. So, the onus is on every single online retailer to figure out a way to offer a 2 day shipping option as a standard shipping delivery scheme. Anything less than that is going to be discarded as an option, by the customer. Someday, sooner or later, this could again be shortened and a one day shipping option might become the norm. It is not just about the time taken. Amazon offers same day delivery options even today. But that is a paid service and is available only for select places and select products. With logistics growing by leaps and bounds, with drone tests and 3D printing and taxi aggregator tie ups for delivery, shipping is all set to undergo a major transformation. The free two day shipping option will soon become history in the larger scheme of things.
Taking a leaf out of Target’s swift manoeuvre, other retailers, large and small, will be looking at offering similar or better shipping options so as to not fall out of march this holiday season. So, it wouldn’t be surprising to see eBay, Etsy, AliExpress, Costco, Kohls and Sears offer 2-day standard shipping soon enough.
Check out our blog on how to offer free 2 day shipping without going broke if you want to create a competitive edge for your own store this holiday season!