New Shots Fired in the Shipping Price War

Amazon quietly cuts minimum order level for free shipping

May 9, 2017

Shrugging off the financial burden of shipping costs, Amazon reduced the minimum order required for non-Prime members to receive free shipping to $25, the second time it has reduced the level this year.

The adjustment was rolled out quietly, without a public announcement. It was first noted by deal-tracking site BestBlackFriday.com.

Amazon had reduced its minimum in February from $49 to $35, matching a Walmart offer.

In April, Walmart rolled out a creative response, offering discounts to customers willing to pick up in stores some online-only items. The discounts customers get are based on how much Walmart saves on so-called last-mile delivery costs, which it said represent the lion’s share of shipping cost to customers’ homes.

The price wars over shipping are hugely costly. Amazon said its net shipping costs jumped 43% to $7.19 billion in 2016.

But price is generally the driving factor for consumers when deciding on making a purchase. A December 2016 study from CPC Strategy surveyed 1,500 internet users about their Amazon shopping habits and the path to purchase they take, from discovering a product to finally buying an item. According to the survey, price was the number one factor for US internet users when making a purchase on Amazon. Amazon’s convenient shipping and quality of reviews followed in importance for shoppers.

Meanwhile, cost of shipping is the most commonly cited reason that digital shoppers abandon shopping carts, according to data from FuturePay.