Target tweaks free shipping policy to lure online shoppers

Take that, Amazon. Target cuts its free shipping eligibility to $25, less than the minimum required by its main discounter rivals.


Target is going full speed ahead in retail's race to the bottom.

The Minneapolis-based cheap-chic discounter announced Monday that it has lowered the minimum order amount required for free shipping to $25 -- down from the $50 minimum order policy previously in place.

This puts Target well below rival Walmart, which still requires a minimum order of $50 to qualify for free shipping. It's also significantly less than department store chains such as Macy's and JCPenney, which only provide free shipping for orders topping $99.

It's even lower than Amazon, which requires a $35 order minimum for free shipping. And while it still doesn't beat the freebie shipping of Amazon Prime, president Jason Goldberger said the deal is "one of the best in all of retail."

But shipping isn't the only way Target is attempting to undercut Amazon, as the discounter has ramped up its push to mirror some of the shopping benefits offered by the e-commerce giant. Target says it has begun to ship a portion of orders directly from stores, resulting in shorter shipping times for consumers and improved inventory management for the company. It has also increased free in-store pickup for certain products ordered online.

What's more, Target said it plans to open two new online fulfillment centers this year in Memphis, Tennessee and York, Pennsylvania, in order to further speed delivery times for online shoppers.

Target's omnichannel efforts also spread to its website and mobile app, where it boasts to have seen sales surge during the 2014 holiday shopping season.

As for the timing of the price reduction, it's definitely interesting. Target is facing mounting pressure to increase employee wages following an announcement last week that Walmart will give its lowest paid workers a raise.

Walmart said it plans increase minimum wage to at least $9 an hour for a third of its workforce by this coming April. By next February, that wage will go up to $10 per hour.

With its quarterly earnings report on deck for this Wednesday, it will be interesting to see if Target announces a similar minimum wage hike to level the field.