eMarketer principal analyst Andrew Lipsman and senior forecasting analyst at Insider Intelligence Cindy Liu speak about innovations in ecommerce and how technology is creating a frictionless experience for online shoppers. They discuss the jump from fast to free shipping, what drone deliveries could potentially look like, and dive into the many facets of click and collect. They also explain the downsides of frictionless commerce and how businesses can overcome those hurdles.

Retailers’ average threshold to offer free shipping rose 13% year over year (YoY), while the percentage of orders they shipped for free declined 9% YoY. Perhaps because higher shipping costs kept order volumes in check, the average click-to-door times for ecommerce orders fared surprisingly well.

Free Shipping Day and Late-Season Shopping. Free Shipping Day, an industrywide promotion with over 300 retailers offering free shipping deals, will occur on Monday, December 14. This year, it will happen amid surging demand and volumes for which the country’s logistics infrastructure hasn’t been stress-tested.

According to a January 2020 survey by logistics solutions provider Convey, 79.8% of Prime members say it’s fast and free shipping. But Amazon has hardly rested on its laurels as a best-in-class provider of fast and free delivery; instead, it’s doubled down by investing in fulfillment centers and last-mile delivery to turn free two-day shipping for Prime members into free next-day shipping.

Millennials want free delivery > discounts

Retailers’ average threshold to offer free shipping rose by 13% year over year (YoY), while the percentage of orders they shipped for free declined by 9% YoY. Perhaps because higher shipping costs kept order volumes in check, the average click-to-door times for ecommerce orders fared surprisingly well.

As powerhouses like Amazon, Walmart and Target roll out same-day or one-day shipping initiatives, it can be difficult for smaller retailers to keep up. But with the holiday season around the corner, it’s important for retailers to understand that while fast shipping is a key consideration, free shipping is often a requirement.

But free shipping and easy returns are must-haves

Most consumers want a product delivered the second they order it, and Amazon is betting on that behavior to drive more sales by offering free one-day shipping on Prime-eligible products. An October 2019 CivicScience survey found that a plurality of US internet users would rather order a low-cost item (less than $5) via Amazon than buy it in-store.

During Cyber Week, 86.1% of transactions involved free shipping (up from 85% during the same week in 2018), while none of the six peak weeks of the holiday season was lower than 74.0%. As free shipping deals become standard across merchants, fast shipping increasingly becomes a differentiator.

“Relevance, transparency, and ease are the three guiding values of the consumer experience,” said Arsen Avakian, co-founder and CEO of Cooler Screens, a digital merchandizing and media platform that replaces traditional cooler doors in retail stores, noting that Amazon has disrupted retail by providing transparency (with product reviews) and ease (with free two-day shipping).

“Amazon has used convenience, as a subset of experience, to its advantage for a very long time—they were first to do free shipping and first to do free two-day shipping,” said Keith Anderson, senior vice president of strategy and insights at Profitero. “In every step of the evolution of ecommerce economics ... Amazon is usually the first mover.

And the expectation of getting free shipping is increasingly entrenched—so much so that many will forgo a purchase if shipping isn’t free. Free shipping now matters more because so many consumers buy goods digitally. The practice extends across generations, according to our estimate.