Discount giant Wal-Mart Canada Corp. this week will drop its unlimited free shipping of online orders in a move that signals that competitive pressures are easing a bit even as digital wars remain intense.
Wal-Mart's cyber-shopping charges, which take effect on Thursday, come as U.S. discounter Target Corp. prepares to close all its 133 stores in Canada and leave this country completely, giving competitors some relief, at least for now. On Saturday, Future Shop closed all its 131 stores although about half will be re-opened soon as sister chain Best Buy.
On April 2, Wal-Mart will start charging $4.97 for standard home shipping for orders of less than $50, Simon Rodrigue, senior vice-president of e-commerce at the retailer, said in a note to customers on Monday.
At the $50 threshold, shoppers will "qualify" for free standard home delivery on everything "except especially large and oversized items," he said. Pick-up of orders remains free at stores with special "grab & go" lockers in the Greater Toronto Area or all post offices, except in remote regions, he said.
"One of our pillars has been free standard home shipping to most places in Canada, but in a few days we will make some changes to our home shipping charges to ensure we can continue to give you great service and everyday low prices," he said.
Wal-Mart introduced free shipping in 2013 as Target was expanding into Canada, putting the heat on all retailers to up their game and draw customers in an increasingly crowded market.
Now as Target exits and other faltering retailers close stores completely or partially, the retail sector feels a little more room to manoeuvre even as the players fight the accelerating digital war.
In particular, U.S. titan Amazon.com Inc. is expanding quickly in Canada and forcing Wal-Mart and others to bolster their e-commerce.
While Wal-Mart, a division of the largest retailer in the world, could afford the cost of free shipping the service also took its toll.
In its fourth-quarter, Wal-Mart Canada's operating profit slipped an undisclosed amount although its sales picked up, the U.S.-based parent reported last month. Its holiday season in Canada was strong overall, with its online business jumping 38.5 per cent, it said.
The operating profit decline in the quarter was a result of spending on e-commerce, discounting as well as a restructuring which saw the loss of about 210 head office jobs.
Retailers struggle with free shipping in Canada, given the wide expanses of the country and heavy cost of shipping to remote areas. Many merchants offer free shipping on minimum purchases, which can help offset some of the expenses.
Wal-Mart offered free shipping to 97% of the country and free next-day shipping to most big cities, Mr. Rodrigue has said.
In November, Amazon raised the ante in Canada's e-commerce battle by offering same-day shipping in Toronto and Vancouver just as retailers headed into the crucial holiday shopping season.
Amazon charged fees for same-day delivery, starting at $6.99, although Wal-Mart already was offering free same-day shipping in the Greater Toronto Area.
Same-day shipping is becoming more common among U.S. retailers and malls but is a relatively new phenomenon in Canada.
But offering cyber-services, such as same-day delivery or free shipping, can come at a price, one that Amazon.ca's parent has been ready to pay as it has operated with losses to build its business.