Before I begin, a reminder that I do not work for Anthropologie. I’m not officially affiliated with them and I did not speak with anyone who works at Anthropologie about this topic. I’m drawing my points from other sources.
This post serves as the opening to a community dialogue about free shipping and promotions. I know there have been a lot of rumblings in the community about this and I wanted to give everyone an open thread in which to state your feelings and ideas.
As a customer, free shipping seems like a no-brainer to me. It’s become normalized into my online shopping routine. Whether through a promotion code, a perk of being a brand cardholder or through standard store tactics free shipping has shifted from being a pleasant surprise to an expectation on my purchases. I’ve come to expect it from every store I buy from.
The thing is, once you take a deeper look at who’s offering free shipping, a clear picture is painted.
Who offers free shipping: department stores, shoe retailers, middle to mass market brands.
Who doesn’t offer free shipping: specialty retailers, boutiques, luxury brands.
In other words, stores which stock items/brands you can find in multiple places offer free shipping as an incentive. Stores that carry unique items that can’t be bought anywhere else charge for shipping. That is the underlying factor. The next factor is how healthy a store/retailer is. The Gap family of stores carries products unique to each brand but still offers free shipping. Why? They’re not doing as well. A third factor is market segment share. Stores like Ann Taylor/LOFT or Talbots that are trying to increase their demographic share offer free shipping to drive conversions.
In all of these cases, the brands have something significant to lose if they don’t offer free shipping. For a brand in a strong position these carrots are less necessary.
Anyone that has worked for Anthropologie knows that the brand is not big on marketing, promotions or coupons. The last real promotion I can remember (extra 25% off sale items) happened in 2006. Back then Urban Outfitters’ revenue was around $314 million with 95 Anthropologie stores. This past fiscal quarter Urban Outfitters reported $552 million in sales with 145 Anthropologie stores (plus online/direct sales). The company is growing at a healthy pace. They didn’t take out newspaper ads, you don’t really see banner ads for Anthro and I’m not sure they even know TV ads exist. I’ve never heard of a promotional code for Anthropologie besides the ones employees use. That’s just not how this company rolls. They’ve taken a hard line against promotions and I expect this stance to continue.
Why the hard line? A few educated guesses. First, it dilutes the brand. Remember that Anthro’s target demographic is women in their 30s with household incomes of over $200K per year. This is not to say that the store doesn’t welcome people outside of this target. There is no reason to feel ashamed or ostracized if you fall outside of that category; nor is it Anthro’s intent to drive you away. But it is to say that if you fall outside of that demographic (as I do) you still have to play by the standards being set for that target. Once you reach the $200K income level I think it’s safe to say that you have a healthy discretionary income. And you are less likely to be stopped from making a purchase because of a $15 shipping charge. Why should Anthropologie send out unecessary incentives to its bread and butter? Instead, Anthro holds after-hours events and private parties. They create the environment that customer expects.
Secondly, once you start promotions it’s very hard to take them back. I never buy from Gap brands anymore until they do their Friends & Family promotion. Same deal with Bloomingdale’s — I buy during their Brown Bag sale and that’s it. Nordstrom’s Anniversary Sale. And so on. If you’re not one of my top 3 stores, I am only tempted buy with double-digit % off. Sorry. I will rarely make exceptions. I don’t think I could apply this standard to Anthropologie for myself; it’s my favorite store so I will buy regardless of price. But for people not quite as Anthro-obsessed, Anthropologie risks inertia by offering discounts. Their customers are currently trained to expect to pay full price, or at best sale price. There is no % off expectation.
Finally, promotions are expensive for companies! Free shipping impacts operating expenses. Operating expenses are balanced against revenue. If your operating expenses become too high against your revenue, it means you have cut expenses. How do you do that? Cut jobs, find cheaper distribution and production centers, and raise prices. Not a healthy combination. During free shipping promotions return rates increase exponentially. I know there have been recent quality complaints but companies are forced to write down a quantifiable percentage of returns — the item returned is no longer in saleable condition for one reason of another. Maybe the item was worn, perhaps it is damaged, maybe it was returned off-season. So free shipping only makes sense when the net gains in revenue outpace the operating expenses taken on, and often the true results aren’t seen until a quarter after the promotion concludes.
What does this mean? Quite honestly, if I were a retailer, I would be OK with slightly fewer sales if it meant much fewer returns. Think about it — during this last free shipping promotion, how much did you buy? And how much did you return? Now compare that to a non-free shipping period. During free shipping, how many one item orders did you place? Those are expensive for a company, as it is when customers place multiple orders in a day-to-day period and a company has to ship each item separately.
Anthropologie is about the third the size of J.Crew, and about 1/10th the size of Gap. They don’t have as many distribution centers and while I’d like to think in today’s world that doesn’t matter as much as it used to, it does mean that the company has to be strategic in its inventory control and shipping practices.
I can understand if, as a customer, you really don’t give a damn about any of this and just want your free shipping thankyouverymuch. I would not complain if free shipping came to pass! And quite honestly as a frequent buyer of Anthropologie goods I am alarmed at their lack of loyalty perks. Should the company’s fortunes change I think the lack of retention programs will come back to bite them.
What I would caution against is the mob mentality. It is very easy to say that you buy so much more with free shipping or x coupon or y promotion. But often our beliefs do not match up with facts. I found that my personal purchase history at Anthropologie was influenced not by free shipping but rather when my discretionary clothing income was available. This is clearly influenced by my proximity to 4 stores, yes, but more it is a result of my personal budgeting routine. Maybe that is the case for you and maybe not. But let’s not pick up our pitchforks here and storm the castle. That’s not going to accomplish our goal.
The question is, how do you influence Anthropologie to consider either A) standardizing and lowering their shipping rates or B) making it free.
First, I think it’s important to reach out to Anthropologie directly. Much as I wish I had a magic phone line directly to the co-presidents of Anthropologie or Urban Outfitters’ CEO, I have neither. The company does read this blog, but trust me when I say an email directly to the company will have better results. It’s something they can measure.
What should you say? That’s harder. I can tell you what you should not say: I demand free shipping; I won’t shop at Anthro unless there is free shipping; my spending at Anthro has stopped since free shipping ended. The numbers just do not back up those arguments right now. Urban Outfitters’ profits continue to grow with Anthropologie leading the way. I think some persuasive arguments include POSITIVE trends that you undertake during the free shipping promotions. Things like: I spend more time on your website/in your store during free shipping promos. I find myself buying more during free shipping promos. I feel that free shipping is a perk which in turn makes me more loyal to the brand. I buy things during free shipping that I might not buy without it. Things of that nature.
Another strong argument is peer-to-peer comparisons. Things like: Anthropologie, I have noticed that many of the other stores I shop at have free shipping over a certain threshold. Since you do not, when I only have enough money to spend at one store I am more likely to choose the other one over you. (Cite a specific store example if you can.) Or since I am a cardholder at x store I am often rewarded with perks such as free shipping on all online orders. I am more likely to purchase from that store’s website than Anthropologie’s as a result.
Remember that at the end of the day the loudest voice you have is your wallet. Much as I am a HUGE Anthro fan, if you don’t like their policies the clearest message you can send is by not buying their products. We all know that saying: actions speak louder than words. I think I’ve put down enough words, so I’ll open this to you. What do you think?
