Retailers warned to cut shipping costs as big brands push Free Shipping Day worldwide

Aussie retailers are being warned to start dropping their shipping costs or more customers will start moving their dollars offshore altogether, and will make use of initiatives such as the Free Shipping Day organised both in Australia and the United States.

The issue of high shipping costs pushing Australian customers overseas has also been thrust into the spotlight following the rise of the dollar last night, which reached parity with the US dollar for the first time in a month.

The Free Shipping Day movement, which takes place today locally and on Friday in the US, is a business venture co-ordinated by two different entrepreneurs, but the local operator also says it is an attempt to lobby retailers to drop their shipping prices and have more people shop online.

Companies including Apple, Angus & Robertson, Dell, Dick Smith and Lonely Planet are taking part in the Free Shipping Day. Matthew Cheng, who runs FreeShippingDay.com.au as part of his eCoupons.com site, takes a commission of sales and was inspired by the American Free Shipping Day venture.

“I’ve seen this in the US and in Australia the sentiment is the same here. Without free shipping, the customer goes and shops, and then in their cart at the end, they feel that fee isn’t justified.”

“It’s just as the airlines now are charging for having baggage, and so on. Some retailers are starting to have free shipping worldwide, and we’re seeing that movement globally now.”

Cheng says he also noted demand for such a venture after watching Australians going online to find cheaper goods overseas and for lower shipping prices, and believes a move to free shipping is inevitable.

“For Australians, I think the internet is so easy to use to compare prices. And with the US dollar weakening, that sentiment is growing. And eCommerce sites in the US have an advantage because their prices are lower and they have more buying power.”

The shipping day in the United States is sure to turn some heads in Australia, especially in the lead-up to Christmas, with big-name brands such as Macy’s, Fossil, Kmart, Sears and Zazzle all taking part. The initiative also comes after some American retailers such as Gap have started shipping internationally, targeting foreign demand.

Recently US department store Sears specifically targeted Australians with a 20% discount on international shipping to attract bargain-hungry shoppers cashing in on the high exchange rate.

“I think it’s great to be giving free shipping if you’re an Australian retailer,” he says. “You want to be giving these types of benefits.”

But Brian Walker, chief executive of the Retail Doctor, says retailers need to think carefully about what they are doing and not rush into a situation where they could end up losing money very quickly.

“There has to be a viable business model. But we need to talk about the growth of online retail in the global economy… we need to look at whether we are discounting effectively, and value adding effectively.”

“I think it’s all part of a multichannel affair, an integrated retail offer. In the overall scheme of things, I’m not sure if free shipping is such a huge event.”

Walker points out that retailers should think about whether they are offering particular products in-store and question where they need to provide free shipping for those items.

“I think we’re experiencing a stronger dollar, and that has increased demand – but cycles change. If a product is so unique, if it can’t be replicated in physical stores and must be purchased online, then free shipping has a good value proposition. But it needs to be carefully considered.”