In a quick counter-salvo, Amazon this week announced it was lowering the free shipping threshold for non-Prime members from $49 to $35, a response to Walmart’s move earlier this month.
The speed with which Amazon changed its policy is an indication of just how seriously it is taking ecommerce competition from the world’s largest retailer.
“I agree that it’s definitely in response to Walmart,” said Brian Broadhurst, vice president of transportation solutions for parcel consultants Spend Management Experts. “Walmart even came out recently saying it doesn’t believe fundamentally that it should charge for a membership.”
As Walmart lowered its threshold to $35, it also did away with its subscription-based ShippingPass program, which costs $50 per year and gave members unlimited access to free two-day shipping a la Amazon Prime.
“While the Amazon name is obviously very strong, Walmart is putting pressure on the industry from both a financial and PR perspective,” Broadhurst said. “Amazon lowering its free shipping threshold from $49 to $35 is a competitive reaction.”
“Amazon previously operated at this lower (free shipping) threshold, so they know well what the impact should be in terms of higher order volumes and higher shipping costs,” said Baird analyst Colin Sebastian. Amazon’s rapidly rising shipping costs topped $5 billion for the first time in 2016, and its various logistical moves are attempts to rein them in.