Editor's Note: Below is a brief excerpt from an institutional research note written earlier today by our Retail team. For more information on how you can become a subscriber please send an email to sales@hedgeye.com.
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Today is Free Shipping Friday.
For starters, did anyone know that this day even existed? It sounds more like an Instagram hash tag than a shopping promotion, but it’s simply another invented day along with the usual suspects (Black Friday, Cyber Monday, Small Business Saturday, Green Monday) intended to create a little extra buzz as we approach the end of the Holiday shopping season.
In fairness, the retailers need everything they can get. But on the flip side, if everybody is doing it, is it really a competitive advantage for anyone?
The day not only offers free shipping, but guaranteed delivery by Christmas eve. Of over 1064 participating merchants, one notable missing name from the list is KSS, which on its own lowered its free shipping threshold from $75 to $50 a few weeks back and introduced a whole host of Door Buster sales that will hit this Saturday.
One day of free shipping isn't damning for margins by any means, but we think it’s indicative of the inevitable reality that US Retail is moving to 100% free shipping, 100% of the time.
It will be interesting to see how the carriers handle the capacity. We've seen the reports noting the higher volume, and the spread in on-time order rates has widened by 2 points vs. last year (see exhibit 2 below). With all the promises being made on delivery time, we could see a lot of disappointed parents on Christmas Day.
