Us Traditional Retailers Free Shipping To Deal With Amazon Challenge

Introduction: foreign media today wrote that in order to deal with the challenges of pure e-commerce retailers such as Amazon, American traditional retailers have also launched free delivery service, hoping to attract more consumers.

In order to compete with e-business enterprises for the increasing number of online shopping users, the tradition

Amazon usually provides free delivery service as long as it sells for 25 dollars.

In addition, the low price "gold medal member" (Prime) service has been specially launched, which makes it difficult for other retailers to compete with it.

The product of the online retail giant is usually cheaper because there is no need to spend money to hire a physical store or hire a salesperson.

Amazon, of course.

As a counterattack, the Toys R Us will also be available for all online shopping.

For consumers, free delivery will substantially reduce the cost they will eventually pay.

Amazon and WAL-MART began selling a toy called Lets Rock Elmo for $49.66 on Tuesday, saving 6 dollars because of the cost of freight.

In order to catch up with competitors, the toy anti City website also waiver $10 in shipping during the Christmas shopping season, although the price of the toy is still higher than $10.

Kohls CEO Kevin Mansell (Kevin Mansell), an American discount department store, said: "freight free has always been a way to attract users, but now it has become a basic service."

High freight costs will discourage consumers.

Amanda Roddy (Amanda Lordy), who lives in Hoboken, New Jersey, has bought half of the Christmas shopping season online.

She recently cancelled a $30 cheese order because the website charges $14 for shipping.

"Cheese itself is very favorable, but the freight is not favorable."

She said.

cost accounting

Colin McGranahan, an investment banking analyst at Sanford C. Bernstein (Colin McGranahan), said that for WAL-MART and Taghit department stores (Target) and other retail giants, free shipping has not yet had an impact on their profits.

Internet sales account for less than 2% of annual sales in WAL-MART and Taghit. The former's annual revenue is $419 billion, while the latter is $67 billion.

But with the increase of Internet sales, this situation may change.

As long as the online shopping amount of clothing and household goods is higher than 45 US dollars, WAL-MART will deliver free goods all year round.

Some department stores also began offering free delivery throughout the year and began to squeeze gross margins.

Department store Nordstrom began offering free delivery and return services for all online shopping products in August this year. It is estimated that the service will cause its gross margin to fall by 0.15% percentage points.

The company's gross profit margin in the third quarter was 36.6%.

Even so, the company continues to say that free sales attract more sales than cost increases.

The company CFO Mike Koppel (Mike

Koppel said that the rate of return on online shopping services was higher due to reduced manpower costs.

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Macys and Kohl 's also offer free delivery service to online shoppers who spend more than 99 US dollars and 75 US dollars on Kohl.

They said gross margins had already been affected by the loss of delivery revenue.

Kohl s said that during the Christmas shopping season, only the amount of online shopping can reach 50 dollars to avoid freight.

This year, Internet sales in the US Christmas shopping season are expected to grow by 15%, while physical stores may grow by less than 3%.

But the growth of the amount of online shopping will come from the traditional retailers' websites instead of pure e-commerce retailers.

But Amazon expects its fourth quarter sales to grow by 27% to 44% over the same period.

Sucharita Mulpuru, an analyst at Forrester Research, an American market research firm, estimated that the delivery cost of Amason would exceed $1 billion a year, according to Sucharita Mulpuru.

Its operating profit margin in the third quarter has shrunk from 3.5% in the same period last year to 0.7%, while operating expenses increased by 48%, up to 10 billion 800 million US dollars.

Gold medal service

Retailers are looking for a way to provide similar items to Amazon's gold service. The latter can enjoy unlimited two day free delivery service with only $79 a year, and enjoy free streaming video and other privileges.

Some analysts estimate that Amazon's gold service will reach 10 million by the end of the year, and will contribute about $7 billion 500 million to the company, although the project is still in a state of deficit.

Shoprunner.com has provided a similar project, paying only $79 a year, or paying $8.95 per month. Consumers can enjoy unlimited two day delivery service, and the return is equally free.

The project covers a total of 90 retailers, including Toys R & D, American Eagle Outfitters and Drugstore.com.

Toy Roundup says Shoprunner is very popular.

A spokesman for the company said: "it has become a good choice for consumers who wish to send a unified delivery fee to many retailers."