The increasing reach of Amazon has brick-and-mortar retailers changing their game plans. The latest is Target, who for the first time is offering free shipping.
With online shopping becoming increasingly important to consumers, Target has decided to offer free shipping for the holiday season regardless of how much you spend.
The move, announced Wednesday, challenges Internet retail king Amazon's claim to fame -- fast and free shipping -- and is the latest example of how brick-and-mortar stores are changing the way they do business to counter the growing popularity of online shops.
"It is a very competitive retail environment," Target spokesman Eddie Baeb said. "And we know that customers are more and more in charge, whether that's knowing transparent pricing and having easy access to getting that information, or having more options."
The retail e-commerce market grew by 16.5 percent to $264.3 billion in 2013, according to eMarketer, compared with 14.7 percent growth in 2012. eMarker expects this year's growth to be about 15.7 percent.
Faced with the rapidly growing influence of e-commerce sites like Amazon, retailers have had to adjust their practices, particularly as more and more consumers have the benefit of using a smartphone to check prices while shopping in physical stores. But, Target's move to offer free-shipping for its entire site, even if temporarily, is a first. WalMart started offering free shipping on a select number of items during the 2010 holiday season and offers free shipping for purchases greater than $50. Best Buy, another competitor, will offer free shipping for purchases of $35 or more.
Amazon declined to comment, saying the company does not comment on competitors' activities.
Target will have its free sitewide shipping available through December 20. The company has been slowly changing its shipping practices to meet consumer demand. It has offered free shipping to all Target REDcard holders for the last three years, and in June, it implemented free shipping for all orders over $50. Target also launched a new wish list tool for its app, a similar tool touted by Amazon.
The new initiatives still don't beat Amazon's aggressive pricing. Prime customers, who pay $99 a year, get free two-day shipping on over 20 million items, and non-Prime shoppers get free shipping on orders over $35 for those products.
But what Target, and other major retail chains, have over Amazon is their storefronts.
Although e-commerce is growing rapidly, especially during the holidays, more than 90 percent of shopping still happens in physical locations. Many retailers, including Target, have started offering in-store pickup for goods purchased online. Additionally, Target is utilizing these stores to help speed up its shipping process.
The company began testing a "ship from store" service earlier this year. Instead of solely sending packages from Target's fulfillment centers, the company is pulling items straight from the shelves of local stores for delivery. This means a one- or two-day delivery timeframe for more than 90 percent of the US thanks to a network of 140 Target stores, according to Baeb. Amazon is rapidly building fulfillment centers, but its most recently reported figure is "more than 50."
"What we find so interesting, and it's really the next big thing coming, is the continual blurring of those lines," Baeb said about Target combining its online and offline services.
Retailers should build on this advantage quickly. The Wall Street Journal reported earlier this month that Amazon plans to establish a storefront that would allow it to display its branded hardware, like its popular Kindle e-reader line, and allow for in-store pickup.
While Baeb wouldn't comment specifically on Amazon's possible storefront, he did say that "we are very familiar with, and watching and paying attention to what other companies are doing."