Australia Post is quietly winding up its subscription-based “free” shipping service Shipster, which failed to gain critical mass despite the boom in online shopping.
Shipster, which is used by more than 70 retailers including Myer, Target, Harvey Norman and Accent Group, is no longer accepting new members and will close on July 31.
A notice on the Shipster website said that while the service was popular with subscribers and retailers it had become clear it would not reach the critical mass required to be self-sustaining.
The service was launched in October 2017 and was designed to help retailers compete with Amazon’s Prime subscription service, which launched in June 2018.
For a monthly fee of $6.95 ($83.40 a year) consumers who spent more than $25 at any of the retailers that signed up were entitled to free shipping for as many as 160 deliveries a year, as long as shipping costs per order did not exceed $20.
Shipster was aimed at removing the “friction” in online shopping that arises when consumers reach the checkout and are shocked by the cost of shipping.
Shipster went national in November 2017 after starting in Sydney, Melbourne and Brisbane, encouraging retailers large and small to sign up and use Australia Post’s delivery services.
Retailers paid the delivery cost but received a rebate on their share of the subscription fee, which was split based on the volume of orders retailers received.
Retailers such as Myer, Harvey Norman and Booktopia, which previously offered free shipping for orders worth more than $100, could reduce the threshold to $25.
Shipster hoped to have 100 retailers on board by early 2018.
However, the cost of the subscription fee wasn’t high enough to cover the cost of fulfilling orders and both Australia Post and the retailers were partially subsidising the service.
Many retailers including Myer, Woolworths, David Jones, Target and Super Retail Group are also encouraging consumers to “click and collect” to reduce shipping costs.
Australia Post said the e-commerce market had evolved rapidly and many e-commerce merchants now had their own subscription services.
“Free shipping is now more commonplace, and customer expectations have also changed,” an Australia Post spokesman said.
“Where free shipping was once the barrier to online shopping, online shoppers are now focused on getting their items fast, they want more personalised experiences, more choice in how they receive their deliveries and simpler returns.
“Based on this we’ve made a decision to close out the Shipster program on July 31 and focus our innovation investment on developing new products and services to meet the ever-evolving needs of Australian online shoppers.”
Annual subscribers will receive a pro-rata refund for any months remaining on their subscription from the end of May.
This story was originally published by the AFR. Read the original here.