Wal-Mart Offers Free Shipping for Online Orders

(NECN: Peter Howe, Cambridge/Framingham, Mass.) Two weeks before "Black Friday" kicks off the holiday shopping season in earnest, WalMart stunned the retail sector Thursday with a game-changer offer: free shipping on over 60,000 popular holiday gifts purchased through WalMart.com.

How much shoppers do -- or don't -- pay for shipping for online purchases has become an increasingly important competitive differentiator for online merchants. LLBean.com began offering free shipping in August; Amazon.com offers free shipping to customers who pay $25 a year to join a loyalty program; Target.com offers free shipping on purchases over $50 and JCPenney.com purchases over $69. Already, WalMart has offered something called "site to store," where customers can buy a product online then have it shipped, for free, to a nearby store where they pick it up.

Thursday's move cranks competition up several notches, with WalMart.com now waiving shipping charges on numerous gift products like jewelry, baby products, videogames, home electronics, as well as bargain products like a $52 Sanyo digital camera, $39 Philips DVD player, and even a $15 27-piece kitchen play set from KidKraft.

"WalMart.com is growing incredibly ... and this is part of a broader emphasis of WalMart really trying to drive the online presence and online sales,'' said Robin Sherk, senior analyst with Kantar Retail in Cambridge, who follows WalMart's sales and strategies. "It adds an element of transparency to their website, so you know exactly what your order's going to cost because you know that shipping's going to be free to your home.''

Online shopping expert Kelly O'Neill, director of industry marketing for ATG, a Cambridge provider of "personalized, cross-channel commerce software and services,'' said demand for free shipping "has always been an issue, it's just ratcheted up in the crazy season of the holiday season .. Online retailers have been under pressure for free shipping just as a natural part of the business and of consumer expectations.''

O'Neill said the WalMart move is likely to put pressure on other retailers to follow suit. "Retailers, if they haven't responded to it beforehand, really need to, especially as the web becomes a greater percentage of holiday shopping." While overall holiday spending is widely forecast to be up 2 to 3 percent this year from last year, ATG expects online shopping to be up 16 percent, as more and more people replace store- or catalog-based shopping with online purchases.

O'Neill added that a recent survey found 70 percent of online shoppers who abandoned a purchase did so because they saw that shipping charges were going to be too high -- indicating that WalMart.com's moves to waive the fees are likely to strike a chord with a lot of shoppers. And Kantar's Sherk said it may be especially appealing to lower-budget holiday shoppers: "This has no minimum order, so what that really appeals to is people who aren't trying to buy as much or maybe people that can't spend as much.''

With videographer Bob Ricci