We are in the crosshairs of the busiest retail period of the year. As many retailers expect to realize as much as 40% of their annual revenues in the weeks leading up to December 25, most are pulling out all of the stops trying to bring those shoppers in the door — whether it is brick-and-mortar or e-commerce/catalog storefronts. As with years past, one of the biggest promotions used in the direct-to-consumer space is ‘Free Shipping.’ Therefore, the questions some may ask are: •    How effective is free shipping in bringing customers in the ‘door?’ •    Do consumers expect free shipping after the cheer of the season has passed? and, •    What is the impact on the retailer’s bottom line? Some questions are more easily answered than others are, and some may entirely depend on how a retailer chooses to market their products – so let us look. Bringing Customers in the Door One of the largest contributors to shopping cart abandonment is shipping costs. Many retailers have gravitated toward low-cost ground shipping to reduce consumer costs, but the fact remains that consumers are watching every dollar — and the carrot of free shipping is almost impossible to pass up.  While that is great news for the retailers, they need to proceed with caution by informing consumers what ‘free shipping’ typically means. The package will typically ship via the most economical channel, and customers need to be aware that there are very specific cutoff times for orders to ensure its arrival on time. It sounds obvious, and to those of us in the industry – it is, but consumers oftentimes see what they want to see, and the frenzy created around ‘free’ anything oftentimes causes them to look past the fine print. A word of advice, proceed with caution when making decisions that could adversely affect the customer experience. Setting Future Consumer Expectations Online revenues this holiday shopping season are up, way up. Estimates have identified increases of up to 30% or more, meaning that more people are shopping online and buying more online than in the past. Some retailers have engineered entire marketing programs around free shipping to drive business all year, and others are just beginning to explore the opportunity. For the latter – it’s critical to understand what it may take to ensure future success while understanding free shipping’s impact on its holiday success. If your merchandise selection is unique in that consumers have a limited or no option in securing the same or similar items elsewhere, then it may not be a good strategy. However, if you find that the ability to offer free shipping for the same or similar merchandise to your competitors really helped to drive increased volumes, it may be an excellent opportunity to identify new, long-term customers. Free Shipping and the Bottom Line In an extremely competitive environment, every penny counts — as evidenced by some premium retail brands that have steadfastly refused to offer discounts in the past jumping on board to discount products this holiday season. Combined with the fact that total landed transportations costs can account for as much as 40% of a company’s operations budget, there is very little room for absorbing additional costs. So, the scenario any merchant needs to assess is if their business is healthy enough to absorb these incremental costs, how will it immediately impact operating income, and will it open the door to new, sustainable revenue opportunities that will pay dividends down the stretch? All of these are tough questions, and all of them require a merchant’s full attention — because once the decision is made to go down this path, changing course could create a sour taste in the mouth of its most valued asset, the customer. I appreciate your time during what is undoubtedly a busy time of year for all of us in the industry. I wish you all much success for a strong close and an even better 2011. Best regards, Kevin Brown Director, Marketing