We knew it couldn’t last. Here at the Worlding offices, we’ve been getting cases of soft drinks delivered via
Amazon Prime, along with all of the other junk we buy. it was just too good to be true.
As Wired reports, “for nearly a decade, Amazon.com customers could enjoy unlimited two-day shipping for $79 per year. But the company has now hiked that price to $99. The move could change purchasing habits at the world’s largest online retailer if customers balk at the increase. But Prime — which also offers unlimited access to online video — is still a perk that’s unrivaled across the web.
“For existing Prime members, the hike will hit if their membership renews before April 17. And according to reports, the price for new members goes up March 20. Though the extra $20 might be disappointing to customers, it was expected. In its most recent earnings call, the company said it would likely have to raise Prime’s price to keep up with rising shipping costs. CFO Tom Szktuk told analysts and reporters that the price hike would be anywhere form $20 to $40, so Amazon is at least coming in at the bottom end of the scale.
“Of course, that was probably part of the company’s PR strategy. “Look! We raised it the bare minimum!” It’s also no surprise that Amazon brought Prime right up to the edge of triple digits without going over. If there’s anything about customer psychology that any retailer knows, it’s that 99 — cents or dollars — is way better than 100. Prime is such a huge driver of sales for Amazon that messing with the price at all carries a big risk of losing existing subscribers and failing to sign up as many new ones. Amazon had to strike a balance between keeping its revenue engine running and slowing the billions it loses each year in shipping.
“After all, two-day shipping doesn’t come cheap, even if Prime has managed to lull customers into believing it’s a right, not a privilege. The real question around Prime is whether it’s sustainable at all, even at a higher price. Prime has set the standard for ease and convenience in online retail, a standard that has helped triple Amazon’s sales over the past five years, sending its stock price on an epic tear. But maybe there’s a reason other big retailers haven’t cloned Prime themselves. Maybe it’s not that those competitors can’t, but that they suspect Prime can’t last.”
More at: http://www.wired.com/business/2014/03/amazon-raises-price-prime-keep-two-day-shipping-alive/