Black Friday doesn’t arrive until Nov. 23, but Amazon (NASDAQ:AMZN) has already delivered its first big deal of the holiday shopping season: free shipping with no minimum purchase. Amazon stock is down 2.4% this morning despite the news.
Amazon isn’t the first retailer to take this step, either. Target (NYSE:TGT) announced it was offering free two-day shipping through Dec. 22 this year. And the battle for online shoppers is heating up between Amazon, Walmart (NYSE:WMT) and Target.
Amazon Announces Free Shipping for Everyone This Holiday Season
This morning, AMZN announced that starting today (Nov. 5), all U.S. customers are eligible for free shipping, with no minimum purchase amount. That means the roughly half of U.S. households that don’t yet pay for an Amazon Prime membership are getting a taste of the benefits, just in time to open their wallets for the holiday shopping season. They’ll no longer be required to put $25 worth of goods in their cart before getting free shipping.
The offer is good for “hundreds of millions of items” and is extended to any orders that will arrive in time for Christmas. The offer isn’t quite as compelling for Amazon Prime members, who are less likely to shop at a competitor after paying a yearly Prime membership.
They get free two-day shipping on the same items (a benefit they already paid for), but those in supported cities will also get an upgrade to free same-day delivery on many items.
The Current State of Holiday Online Shipping
As of today, Amazon and Target are both offering free shipping for online customers during the holiday shopping season, with no minimum purchase required. Target is offering free two-day shipping — a perk AMZN is only offering to its Prime members — but the number of items eligible is described as “hundreds of thousands.”
Amazon says its free shipping offer to the general public, and free two-day shipping for Prime members is good on “hundreds of millions of items.” It also says the free same-delivery for Prime member living in supported areas applies to “more than 3 million items.”
The one retailer that has yet to join the free shipping fracas is the company that has been challenging Amazon on everything from groceries to streaming video to its Kindle eBook business: Walmart. While Target and Amazon are waiving the minimum purchase requirements for free shipping, Walmart is opting for free two-day shipping on “more than 2 million items” but a minimum $35 purchase (down from $50) is required.
Another Amazon 4-Star Opens
In a reminder to Walmart, Target and other brick and mortar retailers that Amazon is not content to dominate online sales, the company is opening another Amazon 4-star store. The new Amazon 4-star store opens today in Berkeley California. It follows one opened in Denver last week, and the original location which opened in New York in September. With this concept, AMZN is targeting impulse and gift shoppers, with curated collections of products
Bottom Line on Amazon Stock
Amazon is fighting to keep Target and Walmart — especially Walmart — from hurting its online retail sales. Free shipping is going to cost Amazon (last year the company spent $21.7 billion on shipping), but the holiday sales period is a crucial one, and AMZN is determined to keep the competition from making further gains.
Ideally, it will win back customers it may have lost as Walmart ramped up its own online presence. The company is also going all-out to deliver a holiday quarter that impresses investors after a revenue and Q4 guidance miss slammed Amazon stock at the end of October.
We’ll have to wait to see how the various free shipping offers affect the online shopping landscape during the holidays, but there is one clear winner at this point: consumers.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
