Amazon halves free-shipping minimum

The online retailing giant is waiving shipping charges for the next few months on certain orders of $49 or more. It has also begun selling electronics equipment from Sony.

Margaret Kane Former Staff writer, CNET News
Margaret is a former news editor for CNET News, based in the Boston bureau.
Margaret Kane
2 min read
Amazon is upping the ante on its competitors by testing a lower minimum-order requirement for its free-shipping program.

The online retailer announced its free-shipping program for orders of $99 or more in January; since then, several other e-tailers have followed suit.

Under the new program, all orders of $49 or more will be shipped for free. Amazon will test the program for three to six months, then make a final decision on whether to continue it. Orders must be shipped to a single U.S. address, and certain items are excluded, such as toys, video games and accessories, baby products, and goods offered through its partnership with Target.

Amazon CEO Jeff Bezos hinted last week that the company would take the policy even further. Speaking at a Bear Stearns technology conference in New York, Bezos said his mission was to drive down costs so the company could continue offering price discounts.

Analysts have questioned whether Amazon could afford to offer the free-shipping program, but the company seemed to allay those fears when it topped analysts' expectations for the first quarter.

Amazon recorded revenue from shipping charges of $89 million in the first quarter, up from $82 million in the year-ago quarter. But the company lost $1 million on shipping in the quarter, compared with a $5 million loss in the year-ago quarter. Amazon said that the shipping loss was due in part to the free-shipping offer and partly to shipping costs associated with low-margin products.

However, the company views shipping promotions as a marketing tool, not a revenue source, Amazon said in documents filed with the Securities and Exchange Commission.

Elsewhere on the e-tailing front, Amazon said it has become an "Authorized Internet Dealer" for Sony Electronics. The company said in a statement that it is committed to being the "most secure place to shop for Sony technologies and products on the Internet."