Target Corp. (NYSE: TGT) has taken the “free shipping” trend of e-commerce to a whole new level. Between now and the end of December, it will offer “free shipping” on nearly everything it sells online. Target needs to produce something to help flagging sales created by both a huge data breach of its customer records and general downturn in the fortunes of the largest big-box retailers.
According to the Target website, the new policy is to get “Free Shipping Now With Every Order.” There is an asterisk, which makes the offer a little less attractive:
Free Standard shipping on all orders. Oversized handling fees may still apply. Valid on shipping to the 48 contiguous states and APO/FPO. Offer valid for a limited time only.
There are several other conditions, most of which have to do with how quickly orders get shipped. People who have something called a REDcard can get free shipping and 5% off many items. The deal seems too good to be true, but it isn’t.
So-called free shipping has a poor reputation among investors. For several years, Wall Street has criticized Amazon.com Inc. (NASDAQ: AMZN) for its expensive customer accommodation “free shipping” policy. Amazon Prime customers get free shipping on a number of things people buy at America’s largest e-commerce site, based on sales. The Prime deal costs $99 a year. However, the customers get the benefit of streaming video and music service, which only offers a benefit for people who want streaming video and music. Wal-Mart Stores Inc. (NYSE: WMT) offers its own version of free shipping, which has many conditions, based primarily on whether an order is for items that cost, in aggregate, more of less than $50.
Target’s aggressive new shipping offer may start a free shipping price war as the nation’s largest retailers jockey for holiday sales. The only thing that is certain about the race is that it will cost these companies a lot of money.
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