Hoping to drum up more sales of handsewn slippers, flannel shirts, sweaters and Christmas wreaths, L. L. Bean has dusted off a promotion...
FREEPORT, Maine — Hoping to drum up more sales of handsewn slippers, flannel shirts, sweaters and Christmas wreaths, L.L. Bean has dusted off a promotion it hasn’t offered in three years: free shipping for holiday purchases.
And it will have plenty of company as other retailers use generous promotions including free shipping to get holiday shoppers to open their wallets amid a challenging economic environment.
A holiday survey by Shop.org and BizRate Research suggests 79 percent of online retailers will offer free shipping with conditions such as a minimum order.
The promotion resonates with consumers.
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“It’ll make or break a sale,” Jason Carley of Morrisville, N.C., said while shopping with his mother down the street from L.L. Bean’s flagship store.
Carley shops for his clothes in stores but he does the rest of his shopping — for DVDs, music and electronics — online. “I won’t pay full price for shipping,” he said. “If I’m not getting it free, I want to be getting it cheap.”
Shipping incentives will come at a higher cost to retailers as FedEx and United Parcel Service have added fuel surcharges, but retailers are pressing forward with them either to drive sales or out of fear of losing customers to competitors.
Other promotions such as sales, free gifts and buy-one-get-one-free are augmenting free shipping as ways to get consumers to shop before their wallets are emptied by high gas prices and the first big heating bills of the season.
Walmart.com won’t offer free shipping, but expects to boost online sales by 40 percent to 70 percent with exclusive online merchandise such as cashmere sweaters and digital audio players, according to Raul Vazquez, vice president of marketing.
Energy costs and disposable income, along with the job market and consumer confidence, play a role in a holiday sales growth forecast that’s lower than last year’s.
Online retailers are expected to show much bigger gains this holiday season from a year ago, but their growth is slowing as the industry matures.
Jupiter Research is projecting online sales to increase 18 percent to $26 billion in November and December, compared to last year’s 22 percent. Forrester Research says online sales will grow 25 percent, compared to last year’s 30 percent, to $18 billion. Forrester’s results cover the period between Thanksgiving and Christmas.
Jupiter Research reports that 56 percent of online shoppers say free shipping will be more important to them than last year.
“That hits my radar screen loud and clear,” said Lee Warner of Kennebunk, Maine, who found herself in Freeport on a recent day on an emergency mission to get a coat for her daughter.
L.L. Bean, which relies on online and catalog sales for 80 percent of its business, began its free-shipping promotion early — on Oct. 21 — with no minimum purchase.
The company knew it needed to do something after sales began softening over the summer — even before Hurricanes Katrina, Rita and Wilma, said spokesman Rich Donaldson.
“As it turns out, our decision to go with free shipping was a good one,” Donaldson said. “From our point of view, one of the benefits of free shipping is that it does have a tangible benefit in terms of pocketbook savings.”
A week later, Toys R Us — which unlike L.L. Bean is mainly a store-based retailer — came out with an offer of free shipping on purchases of $49.99 or more. The company made the deal sweeter than last year with additional sales and buy-one-get-one-free promotions.
Macys.com has instituted free shipping for purchases of $125 or more. The spending limit makes the free shipping “rational” from a cost perspective, said Kent Anderson, president of Macy’s online division.
“That’s the quid pro quo. I’ll give you free shipping if you’re willing to spend a certain amount of money,” he said.
This season, eToys.com is offering free standard shipping on selected items, which number about 500, according to Sheliah Gilliland, a company spokeswoman.
Free shipping doesn’t come without a cost, though.
Many consumers mistakenly believe catalog and online retailers make money on shipping and handling, but the cost is usually subsidized by retailers, said George Hague, senior marketing strategist at J. Schmid & Assoc., a catalog consulting company in Mission, Kan.
Shipping and handling accounts for 7.5 to 10 percent of overall sales, so free shipping definitely affects the bottom line, he said.
L.L. Bean, which normally charges a minimum of $3.95 per shipment, anticipates that the shipping promotion will cost more than $20 million. “It’s a cost of doing business for this holiday season,” Donaldson said.