Since Curvy started as a side business 10 years ago, the company has offered online shoppers a flat rate of $8.99 for online delivery and free shipping on all orders over $99.
As the plus-size lingerie website endures its toughest year yet and its own shipping costs rise, founder Wesley Blundy is seriously considering increasing Curvy’s delivery fees.
“It’s probably time,” he said.
“We have to do the numbers. But we’ll probably raise the threshold for free shipping to $120 or $130, which means customers will buy two to three bras to get free shipping.”
Curvy is not the online site that is cutting back on shipping incentives. Compared to six years ago, fewer retailers offer free shipping.
Data from Shippit, a technology company that works with Australia’s largest online retailers, shows that only 70 percent of businesses offer free shipping today, compared to 81 percent in 2018.
Shippit’s data also shows that free shipping thresholds have increased 100 percent in five years.
“Online shopping has gone from a luxury to a necessity for many people,” said co-founder Rob Hango-Zada.
“And many retailers have realized that giving everything away for free is not sustainable.”
While retailers are raising free shipping thresholds, delivery costs for purchases below those hurdles are not rising rapidly, Shippit data shows.
Average shipping costs have risen from $9 to $10.26 in five years, below the rate of inflation.
Retailers also under-promise and over-deliver on delivery times. Estimates are rising significantly and are up to five years, but the actual delivery time is falling to 48 hours.
Mr Hango-Zada said retailers were doing this because they had been criticized for late deliveries during the pandemic and had learned that it was better to promise less and deliver more.
“Retailers are conservatively planning for any delays so as not to disappoint customers,” he said.
The big names are changing their delivery costs
Australian fashion website The Iconic, department stores Myer and David Jones, and discount chain Chemist Warehouse are just some of the retailers that have increased their delivery costs over the past two years.
Online giants such as Amazon and Kogan have also increased the prices of so-called subscription services that give shoppers unlimited free shipping.
Kogan raised its annual rate from $99 to $129 in April as the company’s own June quarter results showed revenue picking up again.
Meanwhile, Temple & Webster’s latest annual results show that the company struggled with an increase in selling expenses from $7.3 million to $8.6 million in the last fiscal year.
The company forecasts that the margin after deducting distribution costs could even fall from 31.6 percent to 30 percent in the next fiscal year.
“A lot of online retailers have had to really rethink their business model,” retail equity analyst Craig Woolford told ABC.
“Profitability has not been particularly good and one of the biggest costs an online retailer has that a retailer (with physical stores) does not have is delivery costs.
“So we’ve seen the thresholds for free delivery being raised. We’ve seen retailers rethink their delivery offering.”
Even retailers with brick-and-mortar stores try to avoid shipping costs by offering other alternatives.
The number of brands offering click-and-collect services – where online shoppers drive to a store to pick up their package – has increased by more than 300 percent during the pandemic, according to Shippit data.
But perhaps the strongest trend is the tech company’s data on free returns, which have declined sharply in recent years.
Five years ago, every second retailer covered the shipping costs for their customers if they wanted to return an item.
This figure is now below 20 percent.
“We have seen a massive decline in retailers offering free returns. And this is a cross-industry trend,” said Mr Hango-Zada.
“The cost of a return is actually quite significant for a retailer.
“Depending on the industry you are in, the costs to your business could be quite high.
“If we take fashion and clothing as an example, we can expect return rates of up to 30 percent.”
Rob Hango-Zada is the CEO of Shippit. (ABC News: John Gunn)
British fashion website Asos, for example, has stopped offering free returns on change-of-purchase purchases in 2023 and increased the price to $8.99.
Sustainability experts welcomed Asos’ decision, saying that free returns have long encouraged people to make impulse purchases and return things they don’t want, leading to wasted plastic packaging and fuel.
As an example, Mr Hango-Zada cited the trend of “wardrobing,” in which customers buy multiple sizes of an item to find the right fit and then return the sizes that don’t fit.
Many fashion retailers also complain that customers wear a piece of clothing for a special occasion and then return it, hoping that the smell of aftershave or a bit of makeup will go unnoticed.
“This has a double whammy for retailers,” said Mr Hango-Zada.
“Not only are you paying for shipping there and back – if they offer free shipping and free returns – but the time you have the product is actually dead time because they can’t sell it to anyone else.”
Asos did not respond to ABC’s inquiries.
Who is to blame for rising shipping costs?
At its small warehouse in Sydney, Curvy has already removed free shipping for returns due to changes of mind.
Curvy has already removed free shipping for returns on purchases where you have changed your mind. (ABC News: John Gunn)
“Returning everything used to be free,” Ms Blundy said.
“Now we offer free shipping if you want to exchange it for another one. So that was a little compromise we made.”
In an area of retail where a good fit is everything, Curvy has introduced a free online bra fitting service, which it says has helped reduce the return rate of all orders to eight percent.
Mr Blundy started his business after realising there wasn’t enough choice for people with larger chests. The most difficult part of his business’s logistics is the weight differences, which can affect postage, he said.
For example, shipping a size 6D for Curvy costs around $8-9 according to the contract with Australia Post.
However, anything over 500 grams is priced differently, meaning a bra with a lot more fabric, such as a 28N, can rocket to three times that price, particularly if shipped to a regional area, says Mr Blundy.
“We certainly won’t charge anyone a difference (in postage) just because they wear a different size,” he said.
“As a body-positive, size-inclusive retailer, this would go against our entire philosophy.
“Our challenge is to look at innovative packaging and different carriers to try to reduce these costs.
“Australia Post has been a really difficult partner over the years. When we were small they always told us we had to increase our volume to get better rates.
“Our volume subsequently increased tenfold and our rates went up. That was really disappointing.”
“I think they have something of a monopoly in the regional areas.”
Fashion brands are trying to manage the environmental impact of online shopping.
(ABC News: John Gunn)
As a result, Blundy said they have started using more courier services, including Toll Express, but he would “like to see more competition”.
Australia Post said the latest price change for domestic parcel shipping represents an increase of 2.5 to 3.5 percent, well below the current rate of inflation.
“Australia Post is a fully self-funded company,” a spokesman said.
“Prices are reviewed annually and Australia Post carefully considers the impact of any changes on our customers.
“We also work with customers to ensure they use our services as efficiently as possible.”
