E-Commerce Shipping Cost May Rise in 2014

Price of delivery may rise when demand reaches limit.

Katherine Braun sorts packages toward the right shipping area at an Amazon.com fulfillment center in Goodyear, Ariz., on Nov. 11, 2010.
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The new year will be a prosperous time for online retailers, but the delayed gift deliveries during Christmas have likely taught retailers not to be too ambitious when promising guaranteed deliveries or offering free shipping as demand increases.

Approximately 32 percent of the 25 largest online retailers in North America failed to deliver part of their Christmas orders on time, according to market research firm Internet Retailer. To keep people from procrastinating and ordering gifts at the last minute, online retailers may have to increase prices closer to a busy delivery period, says Sucharita Mulpuru, a retail analyst at Forrester Research. Free shipping is also "a cost of doing business in the e-commerce world these days," she says, on busy shopping weekends including Cyber Monday in November, but websites may limit those offers as an incentive for customers to order gifts more efficiently.

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Sending out emails promising last minute delivery of gifts is a growing strategy to reach online shoppers, but websites may have to scale back on those offers as well if they cannot guarantee delivery, Mulpuru says. Amazon Prime members receive free two-day shipping on certain products for $79 per year, but Amazon limited the acceptance of new users to that service during the peak holiday shopping season.

"I think it's actually something that is good for physical stores, since we don't have physical capacity to deliver every single Christmas order at the last minute," Mulpuru says.

Options for e-commerce services including Amazon may also pursue create different types of websites that specialize in last-minute delivery in certain states, she says. This is a chance for online retailers to be more aware of carrier delivery limits, but the delays are "not likely to move the needle" on the growing popularity of e-commerce that Forrester predicts for 2014.

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"In 2014, the percentage of traffic and total online orders placed via mobile devices are set to increase in virtually every market worldwide, and Forrester expects that a growing number of brands will launch new mobile websites and apps in response," according to a report published by Forrester Wednesday.

Online sales for the fourth quarter of 2013 were up 10.3 percent compared with 2012, according to a digital analytics report from International Business Machines. Purchases on mobile devices and smartphones increased by approximately 46 percent compared with 2012, according to IBM. Purchases on smartphones made up 5 percent of online sales, while purchases on tablets consisted of 11.5 percent of online sales.

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