L.L. Bean: Free shipping on everything. Will others follow?
L.L. Bean is now offering free shipping on all of its nonfreight merchandise. It will have to expand sales to cover the extra cost.
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These companies offer to ship for free anything you buy. No monthly minimums. No date restrictions.
Will other retailers follow suit?
“That’s the grand question,” says Curt Barry, president of the consulting company F. Curtis Barry & Co. in Richmond, Va. Many companies already have free shipping promotions so frequently that “they are training the consumer to expect free shipping.”
Online shoe retailer Zappos.com has made its name by offering free shipping all the time. For L.L. Bean, the move is actually a return to its roots. From its beginnings in 1912 until 1991, when it was feeling pressure from competitors and fuel costs, the Freeport, Maine, clothing and outdoor gear retailer offered free shipping, all the time, for (almost) everything.
This time, the offer’s meant to be permanent for customers in the United States and Canada. There’s no minimum order required. Only items that count as freight, like canoes, won’t be shipped for free.
Of course, customers can still opt to pay extra for an express delivery if the two to five business days that free shipping takes seems too long.
For five of the past eight years, L.L. Bean has offered free shipping around the holidays. Last year, the offer lasted from August to December, allowing the company to test the waters. “We’ve been working on this plan for a couple of years, so it's not a rash move, it’s a bold move,” said L.L. Bean spokeswoman Carolyn Beem.
Still, at a time when fuel costs are rising, the move is a calculated risk.
“It’s a huge expense to L.L. Bean,” says Mr. Barry, who estimates that free shipping can cost a company between 5 and 8 percent of its net sales. But as long as L.L. Bean can make up for the cost in added sales, they’ll be fine, he adds.
Because of L.L. Bean’s high volume of shipped merchandise, it has considerable leverage in negotiating prices with shipping companies. “They’re going to end up with really good pricing, so they can afford to be a little more adventuresome in the marketing,” Barry says.
Companies with fewer customers and fewer sales would have a much harder time paying for shipping costs. Typically, companies charge anywhere from 8 to 18 percent of the purchase amount in shipping. Nevertheless, Barry doesn't discount the possibility that other retailers will jump into the free-shipping arena.
“L.L. Bean is in a unique position because they touch so many consumers,” he says. “But are they in such a unique position that it will keep other people from doing it? The answer is no.”
Other retailers certainly are experimenting with free-shipping offers. For instance, Walmart offered free shipping for about a month last fall leading up to the holidays, and Amazon waives shipping fees for customers who spend more than $25 on certain merchandise.