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Data & Trends, Retail & Inventory, Shipping

Amazon’s New Free Shipping for Small Items May Hurt Local Retailers


Amazon announced that they will be offering free shipping to all customers for smaller items purchased on the site. The program will help them compete with big-box retailers like Wal-Mart and local grocery stores.

Until now, customers have been reticent to purchase things like beauty and cleaning products online because of shipping costs – it’s easier to get them in person at a local shop. Now you can make purchases on Amazon and have these items delivered right to your home without paying for shipping.

The catch? It will take five to seven days for goods to reach you. While Amazon Prime members may be accustomed to their two-day turnaround times for shipments, all customers will have to wait the standard five to seven day period.

Competitors like Wal-Mart are testing an unlimited shopping program, where you can pay $50 per year for fast delivery. On-demand grocery startups like Instacart and Shipt are also trying to make this behavior mainstream.

Instacart is a San Francisco-based same-day grocery delivery startup. The company lets you place orders on your phone using the Instacart app, and food or home essentials will be immediately retrieved and delivered to you from local stores. As of now the service is only available in a few cities like San Francisco, Miami and New York, but the company is rapidly expanding to new cities.

Shipt also provides same-day delivery from grocery stores, but is only available in Birmingham, Nashville and Dallas.

The difference between companies like Instacart or Shipt and Amazon’s new offering is that the former claim to help local retailers. By outsourcing local shopping to Instacart or Shipts’ contract workers, customers are able to buy from and support their local retailers without the hassle of going to the store. Amazon, on the other hand, is focused on selling their own inventory as cheaply as possible and competing directly with big-box and local retailers alike. If you’re a small business, it may be worthwhile to look into partnering with a company like Instacart in order to provide added convenience and value to your customers.

Amazon is also rethinking other parts of their Prime business – they’re expanding Prime services to third-party merchants who offer free shipping. That way, other online sellers can take advantage of speedy shipping. Also, retailers won’t have to sign up for Fulfillment by Amazon to offer Prime. Amazon says they’ll be keeping close watch on sellers to ensure “they meet strict fulfillment requirements” and are able to deliver goods in the standard two-day period without driving up shipping costs.

Do you think Amazon’s new offering will impact your business? Let us know in the comments section below or tweet us @KabbageInc!