Free Shipping Becomes Freer

The L.L. Bean website says the retailer will offer free shipping for any order placed with the company. Unlike other retailers there will be no minimum purchase price to qualify.

Amazon.com (NASDAQ: AMZN), the world’s largest online retailer, offers “Super Saver Shipping” for orders over $25. Anything below that threshold will only be sent if the customer pays for the transportation.

L.L. Bean thinks, it appears, that it can get more market share for its core product lines which include high-end clothing, outdoor gear, footwear, and luggage. Most of these items are relatively expensive. Why would affluent customers care as much about shipping fees as Wal-Mart (NYSE: WMT) shoppers do? How many people pay less than $25 for an L.L. Bean order? Most of the men’s pants the retailer sells cost more than $50. The company sells a very small number of shoes for under $25, but a pair of socks to go with the shoes cost another $10 to $15.

The only reasonable assumption that outsiders can make is that the free shipping offer is a marketing gimmick. It may make L.L.Bean shoppers think that they could get something for almost nothing if they bought a $19.95 pet place mat. Who would do that without buying a dog bed?

L.L. Bean probably also assumes that the free shipping announcement will get the company some positive press. Many consumers have never heard of L.L. Bean. The firm operates in a high-end niche market.

L.L. Bean expects,  and expects rightly, that almost none of its customers will use the free shipping option. It it unlikely that any more than 10% of the products it sells cost less than that.

Douglas A. McIntyre