E-Tail Shipping Price War Escalates for Target, Wal-Mart, Amazon

Target, Wal-Mart and Amazon are engaged in a game of shipping tag, each trying to adjust their free threshold and other shipping strategies to a level that can lure shoppers away from one of the other.

Minneapolis-based Target has the furthest to go as it tries to put itself in better competition with Amazon, the undisputed online leader, and Wal-Mart, which has been buying online startups to beef up its own operations.

Target has announced plans to put more money into both its online operations and its stores, and saw it online sales rise 22 percent for the first quarter. That was a slowdown from 34 percent in the fourth quarter, though.

With shoppers overall less and less willing to wait for their items to arrive, figuring out a shipping strategy that will encourage people to buy more and also drive shoppers to its stores will be a key element for Target.

Amazon "has a model of getting shoppers to order and having it show up in two days and is working to make it less than two days," said Tim Laseter, a partner at PwC. "There is no doubt that the general expectation is faster and cheaper."

But he noted that Target and Wal-Mart can take advantage of their stores in this game as they increasingly cater to customers.

Target has been pushing on a lot of fronts, from readjusting free shipping thresholds to planning to test a new same-day service at a store in Manhattan.

"We believe that the future of retail is both digital and physical, and successful retailers will need to provide an outstanding experience in both," Chief Operating Officer John Mulligan told investors on Wednesday.

Target had quietly raised its free shipping threshold to $35 from $25 this month, going in the opposite direction of Wal-Mart and Amazon. Asked about that move Wednesday,...

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