Undercuts Amazon And Walmart With New Free Shipping Minimums

Target today announced a change to its e-commerce site designed to undercut competitors like Amazon and Walmart: It dropped the minimum requirements for free shipping from $50 previously down to just $25. This means that the free shipping minimum requirement from Target is now actually $10 less than it is on Amazon, and half of Walmart’s minimum.

While Amazon Prime subscribers are able to choose from over 20 million items available for free two-day shipping, non-subscribers or those buying outside of the Prime catalog have to build orders that are $35 or more in order to qualify for Amazon’s free shipping option.

The company has been working to make meeting this requirement easier for customers, however. For example, last month Amazon announced that all Amazon Seller-fulfilled items with free shipping were now available for free Super Saver shipping. The addition more than tripled the millions of items that are eligible for free shipping on Amazon to also include those sold from the small and local businesses that run on Amazon’s Seller platform.

However, the change did not lower the minimum order requirements – and that’s the consumer pain point Target is hoping to address with its new minimums. The company says that, with virtually no exclusions, the new fulfillment option is effective immediately as of today on both desktop and mobile web.

Target also notes the idea came about after customers responded well to a free shipping offer the retailer ran over the 2015 holiday season, which had the company hitting new sales records on both Thanksgiving and Cyber Monday. Execs said that the free shipping promo led to a 40 percent sales increase during Q4.

As Target’s online sales continue to grow, the company began shipping some of its online orders directly from select stores last year, it says, resulting in shorter shipping times. Now the company adds that it plans on opening two more fulfillment centers in Memphis, Tenn., and York, Penn., in order to continue to address its e-commerce growth.

Today, around two-thirds of orders already qualify for free shipping, so the price cut is more about attracting those shoppers who are making smaller purchases – perhaps stocking up on household items to save themselves a trip to the store. The company says that 60 percent of items on Target’s website are less than $25, which means there’s a lot of inventory for shoppers to choose from at these lower price points.

Target is now not only beating Amazon on shipping minimums, it’s also undercutting, too. While Walmart never charges for a ship-to-store option, it still requires orders of $50 or more in order for customers to qualify for its free Value shipping service (6 to 8 days). Otherwise, there’s a $4.97 shipping fee. There are also increased fees for Standard Shipping (3 to 5 days), Expedited and Rush shipping, Walmart’s website details.

Target’s move to drop the minimums could have a larger effect on the industry, forcing its competitors to also do the same. Of the major online retailers, Target’s option is now one of the more affordable options, but not the best. Best Buy, for example, also requires a $35 minimum, but other retailers including Amazon-owned Zappos and Nordstrom have for a long time offered free shipping regardless of order size.