Many retailers find that they have to offer a variety of shipping options to remain competitive in 2023. Consumers expect same- and next-day shipping choices, along with omnichannel methods like BOPIS and curbside pickup. 

At the same time, consumers are increasingly price conscious, spending more on essentials with little left over for discretionary items. That means retailers are competing for the fewer products they do buy, and using free shipping and other promotions to win them over while hopefully not losing money themselves.

Free shipping remains top of mind

By 2023, consumers have become accustomed to free shipping, and more retailers than ever now offer it. 76.8% of retailers in the Top 1000 made free shipping available in 2022 in some capacity, up from 74.4% in 2021.  

However, more retailers added in contingencies to reach that free shipping in 2022. Just 18.3% of retailers in the Top 1000 offered unconditional free shipping, down from 20.4% in 2021. Just under half of merchants (47.1%) specify a threshold consumers must meet for free shipping, slightly more than the 45.1% with that requirement in 2021. The most significant change comes from the minimum spending required to reach the free shipping threshold. In 2022, the average threshold was $75, an increase of more than 15% from the previous year’s $65. 

The Top 1000 ranks the largest e-retailers in North America by online sales.

82% of respondents in a survey of 1,017 online shoppers by Digital Commerce 360 and Bizrate Insights in July 2023 ranked free shipping as their number one criteria for deciding to do business with a specific retailer. 68% of consumers ranked speed of shipping in their top five factors. 52% of consumers also included free return shipping as an important factor.

Sara Mader, CEO of Palouse Brand, a family farm merchant that sells legumes and grains online, knows firsthand that shoppers want free shipping, and they want it fast.  

“Customers demand one- to two-day free shipping. If you don’t have it, you’re in trouble,” Mader says based on sales and customer feedback.

Omnichannel is still popular

Consumers still want to use omnichannel purchase methods, according to Q2 earnings reports from major retailers. 

Pickup and delivery services drove Walmart’s (No. 2 in the Top 1000) 24% online sales growth in the fiscal second quarter ended July 28, 2023.

“We like the trends we’re seeing in ecommerce,” John David Rainey, chief financial officer, said in the call. “Customers are increasingly counting on us for convenience, and they’re visiting our app and sites more often.

Weekly active digital users grew 20% in the quarter, Rainey said.

Although Target’s (No. 5) digital sales declined in its Q2, the retailer said Drive-Up services led the category. And more than 97% of all sales were fulfilled by stores thanks to the “stores as hubs” strategy the retailer has adopted.

Consumer survey data leads to the same conclusions: customers want omnichannel options. In a February 2023 Digital Commerce 360 and Bizrate Insights survey of 1,069 U.S. shoppers, 50% said they had ordered a product online and picked it up in store in the previous six months. That’s up from 37% in 2022 and 43% in 2021. Survey data shows BOPIS is especially popular among younger consumers in the 30–to–39 age bracket. 58% of consumers in that demographic said they’d made a BOPIS order.  

Discretionary spending is more competitive

Presenting customers with attractive fulfillment options is more important than ever. Many retailers mentioned in second-quarter earnings reports that consumers are cutting back on discretionary purchases, and Digital Commerce 360 surveys show that slow or pricy shipping options can make customers abandon carts. 

Best Buy Co. Inc. (No. 7) said sales declines “reflect a consumer electronics industry that remains challenged due to the pull-forward of demand in prior years and the various macroeconomic factors that we are all too familiar with.”

Big Lots (No. 252) noted a challenging environment with consumers “under significant pressure,” limiting their ability to make discretionary purchases. Victoria’s Secret & Co. also called the sales environment “particularly challenging” and noted declines in traffic and basket. 

2023 Ecommerce Fulfillment Report

This article contains information featured in Digital Commerce 360’s 2023 Ecommerce Fulfillment Report.

The report analyzes how retailers are navigating a variety of fulfillment vendors and changing consumer expectations.

The 2023 Ecommerce Fulfillment Report includes:

• Exclusive consumer survey results reveal what customers value most, their evolving shopping habits and ever-changing expectations.
• 20+ charts and graphs detailing fulfillment, consumer shopping behavior and more.
• Expert analysis on top U.S. shipping carriers and how their finances impact retailers.
• Breakdowns of shipping, returns, and omnichannel offerings among retailers in the Top 1000.

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