Once a staple of online shopping, free shipping is starting to fade away as retailers grapple with new tariffs and rising delivery expenses.
For instance, Modern Picnic, which offers stylish lunch boxes that resemble handbags, has raised the spending requirement for free shipping significantly. Now, customers need to spend between $150 and $300 or face a $15 shipping fee.
“It was a tough decision,” said Alikaminetsky, Modern Picnic’s founder, sharing his thoughts with the Wall Street Journal.
“We had to offset these increases somewhere, but shipping seemed to be one of the more logical places,” he added.
The $15 fee doesn’t cover all of the shipping costs, but it does help mitigate the increasing delivery charges and the burden of new import tariffs.
This year, the U.S. has placed a 10% duty on imports from most nations and a hefty 30% tariff on goods coming from China, with potential increases looming.
Although larger retailers like Walmart haven’t altered their delivery policies just yet, they have acknowledged plans to pass on the rising costs to customers through price hikes.
Meanwhile, smaller businesses are looking towards suppliers to share some of the burden from Chinese imports and are shifting manufacturing to lessen their exposure.
For many small online stores, adjusting the free shipping threshold is becoming a quicker fix to maintain profit margins without raising product costs outright.
“Retailers don’t really know what sort of backlash they might face just because the tariffs are so visible,” noted Anisa Kumar, CEO of retail-tech company Narvar. She explained that businesses are trying to tighten areas like transportation and returns, making them less favorable for consumers compared to their initial shopping price.
Data from Narvar reveals that the average minimum purchase necessary for free shipping eligibility has climbed to $103 this year, up from $82 in 2023.
Footwear brand Kuru has revised its shipping policy in light of the increased costs as well. Customers can either join a loyalty program for free shipping or pay $8.99 at checkout.
Chief Financial Officer Matt Burns mentioned that even with the fees, the company is losing money on each shipment. However, he believes that these shipping costs are helping to cushion the effects of the new tariffs. Still, this adjustment appears to have affected shopper behavior.
“We’ve seen conversion rates drop in the past few weeks,” Burns acknowledged. “I think the shipping fee is responsible for that.”
This trend isn’t surprising, as transportation expert Satish Jindel, president of ShipMatrix, pointed out, “The lack of free shipping is one of the biggest reasons people abandon their carts. Not having free shipping at the minimum threshold is a recipe for a serious decline in sales.”
Since the launch of Amazon Prime in 2005, the pressure on retailers to provide free shipping has only grown, with Amazon setting the bar with its two-day delivery for an annual fee.
Many retailers felt compelled to follow suit, even as rising delivery costs cut into their profits.
According to ShipMatrix data, the average shipping cost, including surcharges, has now hit $12.50, compared to $9.53 in 2019. This year, both UPS and FedEx raised their average rates by 5.9%.
Not every company is seeing pushback from customers, however. Lovevery, a premium toy subscription service, decided to experiment by eliminating free shipping after soliciting customer feedback.
“Eliminating free shipping was one of the most undesirable things we could do,” remarked Roderick Morris, co-founder and president of the company. “We removed free shipping for many U.S. products in late April, but surprisingly, we haven’t lost many customers,” he shared with the Journal.
