L.L. Bean announced that starting tomorrow, it will offer its customers free standard shipping to all U.S. and Canada addresses.
In a video it released to the press, president/CEO Chris McCormick said L.L. Bean has tested a free shipping promotion for its L.L. Bean Visa Card holders during the past four months, and has had “overwhelming results.”
Company spokesman Carolyn Beem says L.L. Bean also saw success with a free shipping test program it offered its customers from August through Dec. 20. The merchant’s standard shipments are delivered primarily via UPS, she notes.
How can L.L. Bean afford to offer free shipping to everybody on every order? Beem says the company has been testing the free-shipping waters over the past three years, and has found a way to absorb free shipping charges through “organizational changes and budget development.”
This is L.L. Bean’s global and strategic response to what bricks-and-mortar retailers such as Walmart and Best Buy and web merchant like Amazon.com are doing, says Ken Lane, president of direct marketing consultancy Hathaway & Lane Direct.
“The primary and structural difference is that L.L. Bean is still shipping mostly from facilities in Maine,” while Amazon has several distribution centers, Lane says. “So while almost everyone has given up on the [shipping and handling] revenue, the approach is to manage the expense side better than others.”
But Lane also sees free shipping as a good customer acquisition tool, and one that you can follow up with a solid customer retention program.
“Merchants take a hit on the shipping and handling revenue, but free shipping does lift response–usually enough to offset the cost,” Lane says. “But L.L. Bean’s announcement, and the free shipping trends we all saw from holiday 2010 will continue, thus diluting the effectiveness.”