Target lowers free-shipping threshold to compete against Amazon and Wal-Mart

Target is developing a more competitive free shipping policy for online customers.

Target is developing a more competitive free shipping policy for online customers.

Target recently reduced its free-shipping online purchasing minimum from $50 to $25, in an effort to compete with other e-commerce giants like Amazon and Wal-Mart.

The $25 order minimum is an extremely competitive offer — both Amazon and Best Buy require customers to spend $35 before qualifying for free shipping. According to Money Magazine, Target is making changes to its free shipping policy specifically as a method of luring buyers away from Amazon Prime.

The policy offers free standard shipping within three to five business days for any orders placed on reaching $25 or more.

Target spokesman Eddie Baeb told MarketWatch that the company's holiday offer of free shipping without a purchasing minimum helped attract new customers and led to "significant gains" in the conversion rate. This holiday success is motivating Target to consider competitive free shipping offers as a direct way to improve sales numbers, decrease shopping cart abandonment rates and increase revenue.

E-commerce will have a major role to play in how companies like Target and Wal-Mart move forward in the coming years, so consumers can expect to see benefits when it comes to shipping policies.

"It shows how serious they are in trying to get their omnichannel presence," Kantar Retail analyst Robin Sherk told reporters.

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