Shipping war heats up as Myer moves to free shipping for online purchases

The pressure for online retailers to provide free shipping has now spread to the mainstream, with Myer confirming that it will eliminate all fees from today and David Jones reportedly investigating a similar move to be announced later this week.

Online retail experts have welcomed the move, saying the industry and consumers have been expecting this type of support for a long time.

“The Aussie dollar has been strong for awhile now, and no doubt retailers have enjoyed cost savings. This is really just another way for passing those on,” says Retail Doctor chief executive Brian Walker.

Mark Rowland, chief executive of online shoe retailer StyleTread, says the adoption of free shipping will help the industry as a whole.

“I think the main issue in this country is that people don’t realise you can actually buy things online. People assume that they don’t have the range, that they don’t have the free shipping.”

Myer chief executive Bernie Brooks said last week the company would introduce free shipping, and upgrade its forecasts for online sales to reach $50 million from the current $5 million per year.

”This is something we have been planning for awhile now. Obviously free shipping comes at a cost, but we have run the numbers and we believe the model works.”

A spokesperson for the company confirmed with SmartCompany that customers will not be charged shipping from today on most items, although some large, bulky items and other miscellaneous items like iTunes gift vouchers will be excluded.

“From an availability point of view, we think this offers convenience, and this will extend to fashion for him and her, electrical goods and so on.”

David Jones was also contacted this morning, but no reply was available prior to publication. However, Fairfax has printed the company could be announcing a free shipping deal as soon as Thursday.

The announcements come after years of lobbying from online retailers and consumers to offer free shipping, which is rapidly becoming the norm among many companies. Free shipping days have been organised in Australia and abroad, with many major retailers taking place, while some businesses are already offering free shipping as the norm.

Brian Walker says both companies control 25% of the department store industry, so any move to free shipping will have ramifications for the rest of the sector.

“This does make it challenging for smaller retailers, but ultimately they will have to follow if they are going to compete.”

“I also wonder that when we get back into a buoyant economy, when the economic cycle changes, you may also find that shipping isn’t as big of an issue as it is now.”

StyleTread chief executive Mark Rowland says it is now crucial that online retailers include free shipping, despite protests from some that this would hurt their margins, as they are unable to increase costs due to pressure from consumers.

“If you have an online channel, it doesn’t have the same costs as your offline channel. Your costs are going to be different for different areas.”

“If you look at Myer and David Jones, they have a lot of employees and a lot of stores. Online retailers aren’t that expensive, we don’t have that expense, but we just put our money into delivery costs.”

“I think the bottom line is that the profit margins are the same, but that the costs are just in different areas.”