Free Shipping Wars Already Heating Up in Battle for Online Holiday Shoppers

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Chris Ratcliffe / Bloomberg / Getty Images

A new offer from PayPal means consumers can get free two-day shipping for online purchases—and unlike similar services from Amazon Prime and ShopRunner, there’s no annual fee to worry about.

Free shipping is increasingly being viewed by consumers not as a perk, but as a requirement for online purchases. The most popular reason shoppers abandon virtual shopping carts rather than following through on the purchase is that they discover shipping isn’t free.

While more and more shoppers demand free standard shipping (the five-to-seven day variety) in order to close the deal, consumers naturally love speedier shipping at no charge even more. Hence the popularity of services such as ShopRunner and Amazon Prime, which promise members free two-day shipping on all purchases. Many would argue, however, that shipping isn’t free at all with these services, because members pay annual fees ($79 usually, sometimes after a free or discounted introductory period) just to get their “free” shipping. Instead of “free shipping,” the business model here could be more accurately described as prepaid shipping.

This week, eBay-owned PayPal entered the speedy shipping skirmishes with a free two-day shipping promotion that truly is free. Shoppers who make purchases with the websites for participating retailers—there are nine total, including Sports Authority, Levi’s, Aeropostale, Dockers, and PBS—automatically get free two-day shipping within the U.S. when they use PayPal at checkout. No minimum purchase is required.

(MORE: 5 Ways Retailers Are Trying to Snag Holiday Shopping Dollars Extra Early This Year)

The list of retailers playing along with the PayPal deal isn’t nearly as robust compared to the huge selection of stores working with ShopRunner, and the spectrum of merchandise offered isn’t anywhere near what’s available at the world’s largest e-retailer, Amazon. For now at least, PayPal is promoting this as a “limited-time” special, and it’s unclear if and when it’ll expire. Buy hey, it’s free for now for anyone who has a PayPal account—or who opens one while the deal is valid, which is a big part of why PayPal is doing this—and the only fees are those paid by the retailers (not shoppers) to PayPal for its payment processing services.

PayPal’s move is the latest attack (or counterattack) being waged in the retail pace against Amazon, which has come to dominate the attention (and dollars) of consumers in ways unimaginable even just five years ago. A year ago, PayPal launched a price-matching policy for the holiday period to better compete with the constantly-undercutting tactics used by Amazon. Best Buy, Target, and Toys R Us have since made their price-matching policies permanent.

More recently, Target introduced two services that compete directly with Amazon Prime—baby product delivery and online video streaming—neither of which involve annual membership fees like Prime. Neiman Marcus, meanwhile, just joined retailers like Zappos and L.L. Bean in the ranks of online shopping options that always offer free (standard) shipping and returns, with no minimum purchase required.

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While these special offers and announcements may seem to be arriving extraordinarily early for the holiday season, it’s par for the course in a period when many retailers launched Christmas promotions in early September. Look for plenty more free-shipping, promotions in the weeks and months ahead. (Last year, for instance, ShopRunner ran a promotion the week before Christmas offering its two-day shipping membership service for free—for a full 12 months, rather than the usual free 30-day period.)