Free shipping becomes 'price of entry' this holiday season, as retailers like Toys "R" Us and Wal-Mart Stores fight to keep up with online-only retailers, such as Amazon.com

Yohana Valdez

Los Angeles , November 27, 2011 (Industry Intelligence) – Free shipping has become the ‘price of entry’ this holiday season with retailers like Toys "R" Us and Wal-Mart Stores Inc. fighting to compete with online-only retailers, such as Amazon.com, The Wall Street Journal reported Nov. 25.

Amazon.com gives brick-and-mortar retailers a run for their money with free shipping on nearly all purchases over US$25 and already low prices. In response, Toys "R" Us has expanded free shipping to all of its on-line inventory with a $49 minimum purchase. Wal-Mart Stores Inc. is offering free shipping on all electronics with a $45 purchase through Dec. 19. Best Buy Co., for its part, this year is offering free shipping on everything available online.

Wal-Mart and Target Corp., whose Internet sales amount to under 2% of their respective $419 billion and $67 billion in yearly sales, remain relatively unscathed so far by free shipping, according to analysts. However, the trend will have a greater impact as the companies expand their online businesses.

Though Amazon forfeits over $1 billion in shipping costs annually, according to a Forrester Research analyst, retailers are looking for ways to compete with Amazon Prime, the $79 per year, two-day delivery service, which fetches around $7.5 billion in revenue. Shoprunner.com offers a similar service at the same price for a pool of about 90 retailers, which include Toys "R" Us and Drugstore.com.

While in-store sales this holiday season are predicted to rise by fewer than 3%, Internet sales should see an increase of 15%, some of which will take place via the websites of traditional retailers.

The primary source of this article is The Wall Street Journal, New York, New York, on Nov. 25, 2011.

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