Since Target confirmed a new, lowered minimum purchase for customers to qualify for free shipping, the leading American retailer has experienced a tremendous increase in online purchases. Upon decreasing the limit in February, nearly 5 million orders have been shipped for free in the span of just four months.
The readjustment to the minimum shipping fee is Target’s most recent effort to drive sales while gaining a competitive advantage over big-name rival retailers—the $25 minimum is slashed in half from what most retailers initiate (free shipping minimum for Walmart stands at $50, minimum for Amazon.com is $35). Studies reveal that shipping costs has the biggest impact on consumers—82 percent of online shoppers want free shipping over anything else along with a flexible returns policy, or else they will consider abandoning their online shopping cart. Customers will choose free shipping over discounted prices—when shopping online, 19 percent of customers will pay full price if retailers offer free shipping.
The free shipping minimum has evidently lead to growth in sales for Target. Customers feel propelled to buy more products and increase the dollar amount to their online basket—as much as 93 percent of online shoppers are influenced to add even more items to their cart if they know they will receive it at no cost.
Target is dedicated to providing numerous opportunities for customers to save when shopping through all channels. Target’s Cartwheel mobile app has already saved users a staggering 229 million and counting. REDcard cardholders automatically earn 5 percent off every online and in-store purchase, free shipping, and free online returns. Target offers free in-store pickup as an option for busy customers. The in-store shopping experienced has been enhanced for customers using the Target mobile app for price match comparing, digital coupons and personalized in-store offers. All customers can now purchase products with ease as Target extended the return policy from 90 days to a one-year policy at all locations. At the end of May, Target announced during the first quarter report that the company has experienced an increase in comparable sales by 2.3 percent due to growth of online and in-store transactions, a climb in digital sales by 37.8 percent, and sales in signature categories escalated over twice the company average. With over 26 million visitors each month, Target.com is currently the fourth most-visited retail website in the U.S.
