Free Shipping From Target, Best Buy Puts Scrutiny on Wal-Mart

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  • Retailers racing to lure e-shoppers by waiving shipping fees
  • Wal-Mart’s online growth has outpaced that of Target, Best Buy

A Target store in Brooklyn, New York, on July 19, 2017. 

Photographer: Mark Kauzlarich/Bloomberg

With Target Corp. and Best Buy Co. both rolling out aggressive free-shipping deals this holiday season, Wal-Mart Stores Inc. might need to unveil some Black Friday goodies of its own to maintain its torrid online growth.

Target is waiving home-delivery fees for all holiday orders, the industry’s latest shipping promotion. Electronics seller Best Buy Co. has done the same, proving that the most contested battleground for retailers this holiday season is the so-called last mile -- getting products to customers’ door.

“Retailers are competing for share and if they are not competitive in the holiday season, consumers won’t choose them next year,” said Erik Morton, vice president of strategy and corporate development at e-commerce software provider CommerceHub Inc.

The moves put the spotlight on Wal-Mart, which has yet to disclose its strategy for the critical Black Friday promotional period. The world’s biggest retailer rolled out free two-day shipping on more than 2 million items in January, and U.S. online chief Marc Lore has credited the offer with helping the company post web sales growth of at least 60 percent in recent quarters -- about double the pace of Target and Best Buy.

“Wal-Mart has them in the rearview mirror right now,” Sucharita Mulpuru, an analyst at Forrester Research, said.

Abandoned Carts

Free-shipping deals have become increasingly essential for online sellers, even though they take a toll on the bottom line. Target has trotted out similar promotions every year since 2014. More than half of shoppers who abandon their online shopping carts do so because the delivery options were too expensive, according to a survey conducted last year by Research Now on behalf of e-commerce software provider MetaPack.

For the first time ever, more shoppers will look for gifts online than in stores this holiday season, according to a survey from the National Retail Federation. The industry association projects that total holiday retail sales will rise as much as 4 percent this year to about $680 billion.

Target is also offering more than 100 Black Friday deals on Nov. 22 for holders of its proprietary “Red” card. The retailer’s 1,828 stores will open at 6 p.m. on Thanksgiving, just like last year, and close at midnight. That’s a change from previous years, when stores stayed open throughout the night and into Friday. This year, stores will reopen at 6 a.m. on Black Friday.

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