Barnes&Noble.com Offers Free Shipping

Borrowing a chapter from Amazon.com Inc.'s playbook, online retailer Barnes&Noble.com LLC is waiving shipping fees on orders of two items or more. The offer applies to books, CDs, videos, and DVDs, as does Amazon's free-shipping plan, which began two weeks ago. But unlike Amazon, Barnes&Noble chose not to fiddle with its product pricing. Amazon has received criticism for using free shipping to mitigate price increases on certain products; pricing for other products stayed the same or decreased.

Borders.com, which will launch a co-branded site with Amazon in August, has no plans to waive shipping charges in the interim, says a Borders Online Inc. spokeswoman. Free shipping has become increasingly rare since dot-coms' halcyon days came to an end. Instead, about 80% of E-tailers run shipping as a profit center, says Gartner analyst Geri Spieler. Free shipping may help some retailers combat the summer retailing doldrums exacerbated by general economic uncertainty.

Amazon and Barnes&Noble.com are certainly looking for a boost, because both companies are in the red--and Amazon plans to reach pro-forma profitability by the fourth quarter. Barnes&Noble.com plans to provide free shipping at least through the end of September, and will consider extending it further, says a Barnes & Noble spokeswoman. The company hopes to generate more sales and attract more customers with the offer, she says, adding that shipping charges can be confusing for consumers.

A recent Jupiter report indicates that 63% of consumers have been deterred from making an online purchase because of shipping charges. But long-term free shipping isn't the answer, says Spieler. That's because most online companies take the wrong approach to shipping and base fees on the amount of money spent instead of on weight and distance. Customers are turned off by these shipping charges because they're not calculated fairly. Under most current shipping policies, a customer who orders a $150 silk scarf might pay twice as much as a customer who orders a $50 pair of boots from the same site. "The average Web shopper might have more disposable income than most people, but no one likes to be majorly taken advantage of," says Spieler.

Instead of doing a blanket promotion for free shipping, Spieler suggests a more judicious approach: If companies really want to be customer-focused, they should reward their most loyal shoppers with free shipping.