Wal-Mart Stores Inc. threw a jab at Amazon.com earlier this year when it began offering free, two-day shipping without a membership fee for online orders of $35 or more.
It's no surprise Amazon is punching back.
The competition between the retail giants continued after Amazon quietly lowered its free shipping threshold for shoppers who don't subscribe to Amazon Prime -- its subscription-based service -- by $10 to $25 this month. It's the second time this year that Amazon has lowered the minimum purchase requirement for non-Prime members after previously dropping the amount from $49 to $35 in February.
Amazon outlined the new policy on the company's shipping options page but has not commented publicly. Orders of at least $25 on eligible items will be delivered for free within five to eight days, according to Amazon's website.
The service is in addition to unlimited, two-day free shipping for Amazon Prime customers who pay an annual membership fee of $99.
"Amazon's latest move certainly dispels the myth that Wal-Mart is engaged in a one-way game of catch-up," said Carol Spieckerman, a retail consultant and president of Spieckerman Retail. "Clearly, Amazon is feeling the heat and not taking anything for granted."
Wal-Mart has taken an aggressive approach to improving its digital capabilities under U.S. e-commerce chief Marc Lore, who joined the company as part of the $3.3 billion acquisition of Jet.com.
The Bentonville-based retailer's move to free two-day shipping on orders of $35 or more covers more than 2 million products, according to the company. It was one of the first e-commerce initiatives unveiled by Wal-Mart after Lore's arrival and also eliminated ShippingPass, the company's Prime-like subscription service that was introduced in 2015.
Wal-Mart's pickup discount program, which offers customers a discount on items purchased online if they agree to pick up purchases at one of its 4,700 stores, was unveiled last month as well. The click-and-collect discount initially applied to 10,000 online-only items denoted on the company's website, but will increase to 1 million products by the end of June.
"This is a competitor which is doing so many crazy things," Sucharita Mulpuru, an independent retail analyst, said of Amazon and Wal-Mart's aggressive response under Lore. "You have to do some pretty crazy things to compete effectively and maintain your share. Ultimately, the consumer benefits."
Mulpuru said a $25 minimum purchase to qualify for free shipping for non-Prime customers is nothing new for Amazon. The company had previously set $25 as the minimum for free shipping before raising it the past few years.
Amazon's return to $25 comes right after Target Corp. raised the minimum to qualify for free shipping to $35.
Target had offered free shipping on orders of $25 or more since early 2015 before increasing the amount by $10.
"I do think that, by creating layers of shipping schemes, each featuring various price barriers and delivery time frames, retailers run the risk of over-complicating their propositions," Spieckerman said. "Traditionally, Amazon's rather straightforward approaches have been a strength so it should think twice before adding new offerings in a tit-for-tat response to Wal-Mart.
"At the same time, retailers need to present options that address both price and convenience since shoppers can give weight to one or the other depending on any number of factors."
Business on 05/10/2017