Australia Post is tackling Amazon head on with the launch of its new free-shipping platform, which is charging a monthly fee in return for more consistent delivery across some of Australia’s largest eCommerce sites.
Launched on Tuesday, Shipster is the product of more than four-years of work from the government-owned agency and has signed on partners such as Myer, Target, Cotton On and Toys R Us already.
Shoppers in metro Melbourne, Sydney and Brisbane can sign-up to the program for an initial monthly fee of $9.95, enabling free shipping on orders over $25 and a free Deliveroo delivery every month.
It comes as American eCommerce giant Amazon prepares to bring its own free-shipping model, Amazon Prime, to Australia sometime after the launch of its marketplace offer here in the coming months.
Amazon charges a more expensive US$10.99 a month for Prime in the states, which includes free-shipping (with no threshold) and a host of other services including faster delivery.
Shipster will decrease in price after an introductory phase ending on 1 January 2018 to $6.95 a month and a $20 delivery threshold.
Australia Post’s general manager of consumer, Jane Cohen, told ISB’s sister publication Inside Retail on Tuesday morning that Shipster would look to deliver local customers a level of pricing consistency that programs such as Prime have delivered in other markets.
“Watching what was happening overseas not just with Amazon Prime, but with Shop Runner and many other disruptors in the market we saw that consumers started behaving differently because they didn’t have to think about the cost of shipping before they got online,” Cohen said.
Consumer focus groups have since vindicated Australia Post’s view that delivery price consistency is one of the key barriers hampering the growth of online shopping in Australia.
Australia Post conducted a small-scale free-delivery trial last Christmas and have since been using their findings to convince local merchants to sign on to the program.
Cohen said there’s another “handful” of brands still being processed, with more announcements to come regarding an expansion of the program.
Australia Post believes the model is sustainable, despite Australia’s relatively high shipping costs, but Cohen did say that the monthly fee doesn’t cover the costs associated with providing the service.
“We believe it is sustainable, it doesn’t cover the cost of free shipping. This is an amazing deal for consumers, it’s almost too good to believe,” Cohen said.
Australia Post has entered into an agreement with partners that will see the industry share the cost of the service, with retailers paying incrementally for Shipster deliveries made through their own platforms.
“Everybody is giving a bit to make this better for consumers and we think that should make it work for consumers in the long term,” Cohen explained.
The Shipster service will include functionality for standard and express delivery, but the majority of deliveries will begin under a standard (generally two-days) model. Australia Post tested standard free shipping against express free shipping and found that consumers were more interested in lower delivery price barriers than speed.
There are no plans to enable customers to shop cross-brand through the service, distinct from Amazon Prime, which utilises central warehousing functionality and leverages shopper data across its program.
Matthew Elmas, Journalist, Inside Retail