Is Amazon Prime more vulnerable to competitive threats?
Following Amazon’s widely-covered move last week to raise the price of its Amazon Prime delivery service from $79 to $99, ShopRunner, which partners with brick-and-mortar retailers to ensure two-day shipping, launched a program waiving its normal $79 fee.
The twist is that the offer is exclusively for Prime members who have not yet renewed their membership at the higher rate. Providing proof of past Prime membership to an e-mail, [email protected], earns the deal. ShopRunner also promises not charge more than $79 when the free membership renews in a year. They note: "and we won’t charge your card automatically."
ShopRunner offers unlimited free two-day shipping on products from more than 85 stores including Newegg, RadioShack and Tiger Direct in the electronics category to American Eagle, Timberland and Tommy Hilfiger in apparel and accessories. The service has no minimum order size and they cover the cost of return shipping.
"People are a little upset with Amazon," Fiona Dias, ShopRunner’s chief strategy officer, told The New York Times. "We hope a lot upset."
Amazon Prime goes beyond ShopRunner to include streaming video via Prime Instant Video, including original movies, and access to the Kindle Owners’ Lending Library that allows Prime members to borrow one free e-book a month. Reports also claim Amazon is in talks with music labels to add streaming music to the list of Prime perks.
Although the Prime rate hike wasn’t as high as the $40 that was reportedly being explored, the biggest complaints seemed to be from those who don’t use streaming videos or e-books and just want cheap delivery. When word of the possible increase came out in early February, many assumed Amazon would bundle prices for those who only want the shipping advantage.
Many complainers also noted that they’re already paying taxes on Amazon purchases for the first time. Amazon blamed the rate hike — the first since the program was launched in 2005 — on rising costs of fuel and transportation as well as increased overall use of the program. Amazon is also raising the price of Amazon Prime for students-from $39 to $49. Prime Fresh memberships will remain $299.
Many reports still valued Prime as a rich deal, particularly for those enjoying all its perks. One drawback to ShopRunner was that users had to go to each individual retailers’ website to find items instead of a one-stop option like Amazon.
Another Prime competitor was said to be Newegg’s Premier program, which costs subscribers $50 a year for free three-day shipping and free returns. Newegg’s program skews toward computer products.
Other options would include Target, which offers free shipping with some restrictions to REDcard members. Walmart offers free shipping with any order over $50 but has no full-year delivery perk program.
- Amazon Prime Members – ShopRunner
- Amazon Rival ShopRunner Jumps on Prime Increase – The Wall Street Journal (sub. required)
- Complaints as Amazon Raises Cost of Prime – The New York Times (tiered sub.)
- How elastic is Amazon Prime’s subscription – RetailWire price?
- Amazon Prime hikes membership fee by $20 to $99 a year – Los Angeles Times (tiered sub.)
- $20 Amazon Prime hike won’t scare off customers – CNNMoney
Has Amazon Prime’s rate hike opened up significant opportunities for its competitors? Where is that competition most likely to come from?