Amazon.com Inc. (NASDAQ: AMZN) announced Monday morning that beginning today (November 5) all U.S. customers can, for a limited time, get free shipping with no minimum purchase amount on orders that will be delivered in time for the Christmas holiday. Amazon has long offered free shipping on orders totaling $25 or more.
The free shipping offer is good on “hundreds of millions of items.” Amazon Prime members will receive added benefits: free same-day delivery on more than 3 million items and, in more than 60 cities, one-hour delivery from Whole Foods Markets through Prime Now. Prime’s signature offer of free two-day delivery remains in force on “more than 100 million items” with no minimum purchase requirement.
This is the first time in the company’s history that it has dropped the minimum purchase required in order for U.S. customers to get free shipping.
Amazon’s senior vice president of North American retail, Doug Herrington, said:
This holiday, customers can enjoy free shipping with no minimum purchase amount on orders that will arrive in time for Christmas, including items from Amazon’s expertly curated Gift Guides across electronics, fashion, home and toys. With hundreds of millions of items available for free shipping to all Amazon customers and more than three million items available with Prime FREE Same-Day Delivery, customers can enjoy the largest selection of items that are fast and free.
What does Amazon have in mind? The company spent nearly $22 billion on shipping in 2017 and this promotion will likely run that total even higher. What’s up?
Amazon is giving non-Prime customers a taste of the benefits of Prime membership. While they won’t get free two-day shipping, “free” is always good. Currently, free standard shipping on orders of more than $25 promised delivery within a week to 10 days. That’s a long time, but, hey, you can shorten that to just two days with a $120 Prime membership.
Even though more than half of all U.S. households already have a Prime membership, that still leaves Amazon with a target market of well over 50 million households. These are the ones that have been hardest to convert to Prime, so the company wants to see if this will do the trick.
Prime members spend an average of $1,400 annually at Amazon, compared with average spending of $600 by non-Prime members. They also shop more frequently — 26 times a year compared with 14 times — than do non-Prime members and spend more per visit than non-members — $55 compared to $42.
The free-shipping promotion will cost Amazon some serious money, but if it can convert infrequent shoppers to Prime members, its work is done.
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