Retail Dive logo for retail analyticsDaphne Howland with Retail Dive researched Amazon’s reactionary move to competition from other retailers. DynamicAction’s Senior VP of Global Marketing, Sarah Engel, contributed analysis to the report.

Key excerpt:

“With an average 42% of online orders shipping free last year, retailers have no choice but to keep a close eye on their customers’ expectations to receive purchases without additional fees. Keep in mind that Amazon has reduced the free shipping threshold to $35, but is not promising expedited delivery,” Sarah Engel, SVP of global marketing at merchandising analytics firm DynamicAction, told Retail Dive in an email. “So, although non-Prime members can now avoid shipping fees, they will still have to wait for up to a week for their packages to arrive.”

The game that Amazon itself started (free, fast delivery) is now beginning to be competitively played, by no less than the world’s biggest retailer. But Amazon will no doubt be keeping a close eye on how to maximize its benefits to its Prime customers, according to Engel. Lowering its free shipping threshold while reserving two-day for Prime is a “calculated move,” and an appreciation of the fact that consumers actually prize “free” over “fast” when it comes to delivery, she added.

“The fact that Amazon released this free shipping threshold reduction with no fanfare displays the pressure the vast majority of retailers have felt from Amazon over the past few years is beginning to go both ways,” she said. “The fact that Amazon didn’t outright match Wal-mart’s free shipping timeline shows their continued commitment to the recurring revenue Prime model. …Closing the gap between Prime members’ benefits and non-Prime members is something that Amazon will be using their advanced data capabilities to monitor closely, and I expect we’ll see additional Prime benefits in the form of exclusive products and discounts as Prime Day approaches.”

Read the full article here.

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