Is Amazon Prime not what it’s cracked up to be?

Discussion
Photo: @isunwater via Twenty20
Dec 21, 2018
Al McClain

As a long-time Amazon Prime member, I’ve generally been happy with the program, but sometimes questioned why multiple packs of certain items are sometimes more expensive than single items on a per unit basis. I also wondered if my failing to check other sites on prices was costing me money and noticed that two-day shipping promised on the product page morphed into three or four-day delivery on the order page.

Now comes an article from Fast Company in which Mark Wilson, a senior writer at the magazine, claims Amazon is not living up to the inherent promise of Prime, two-day delivery in exchange for an annual fee ($119 currently).

Among his complaints:

  • Many items aren’t eligible for Prime service.
  • Prime Pantry and Add-on items require a minimum purchase to get the best deal.
  • Items that are labeled “Prime” aren’t necessarily going to arrive in two days because they are coming from third party sellers, so Prime is redefined to “FREE Four Day Delivery.”
  • Prime items from third-party sellers are often unreasonably priced.
  • Prime items that are out of stock are labeled as “in stock on xyz date.”
  • Getting items sooner sometimes means a surcharge, even for Prime members.
  • Amazon’s customer service phone number is hard to find.

In short, Amazon seems to be playing games with Prime members. Rather than having a straightforward promise and living up to it, Mr. Wilson feels that Amazon is nickel and diming all of us, in a variety of ways.

The New York Times, on the other hand, is out with a piece today saying shoppers find Amazon’s deliveries much more dependable than those of any other retailers, and that shoppers especially rely upon them when deliveries are needed by a date certain.

Amazon Prime’s “about” page makes it clear that nowadays Prime membership is much more complicated than two-day shipping. Amazon offers a variety of benefits for membership, including streaming video, digital books, Amazon TV, Whole Foods discounts and on and on. There are several pages of benefits, a host of shipping options and a load of fine print.

A separate page dedicated to shipping benefits notes that the two-day promise starts when the item is ready to ship. Also, not all shipping speeds and methods are available for all addresses. There is yet another page for fine print on that.

One has to wonder if Amazon Prime has gotten so big that the variety of benefits and fine print on membership is starting to weigh it down.

According to an article in Vox, there are now more than 100 million Prime members, and at least one analyst predicts it will go as high as 275 million.  But there seem to be more than a few consumers who have issues with Amazon and Prime, for a host of reasons, and are cancelling their memberships.

DISCUSSION QUESTIONS: Is Amazon Prime really about free two-day shipping anymore or is the variety of other benefits more important? Should Amazon streamline Prime membership to get back to basics or is it fine the way it is? Where do you see Prime’s greatest retention challenges?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Amazon is simply facing the reality of the monster they created: a consumer who expects fast shipping free."
"So often the “need” for two-day shipping is a perception manifested in customer minds because it is available."
"Prime has evolved to offer so many more benefits that to just focus on shipping is not doing the program justice."

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29 Comments on "Is Amazon Prime not what it’s cracked up to be?"


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Neil Saunders
BrainTrust

The answer to this depends upon the individual concerned. However, from our data, it is clear that not everyone subscribes to Prime for the shipping benefit: about 39 percent of people say that they primarily subscribe for some other reason such as access to Prime content.

The wider point is that Amazon has always seen Prime as an ecosystem that helps them gather data and insight on shoppers, as well as generating direct sales. Prime has never been just about shipping or getting people to buy stuff on Amazon.com.

Bob Phibbs
BrainTrust

What did you expect? This behemoth’s goal was to get everyone on the plan and then do what they wanted to them. I’m not surprised in the least; expect more posts like this in 2019 as shoppers share similar stories.

Bob Amster
BrainTrust

As a consumer (well, the husband of an Amazon Prime consumer) I believe there is value in the fee-paid service. Amazon Prime has succeeded in creating the perception that it lives up to its promise consistently. It has for us. In addition, access to cable TV programming complements the rest of the offering. The offering seems fine as it is.

Mark Ryski
BrainTrust

Prime has taken on a life of its own. While far from perfect, it has captured mind/wallet share of shoppers and essentially set a standard that other retailers (and even Amazon themself) have a hard time meeting. The Prime message is still compelling, notwithstanding the fact that the reality of the service – as pointed out in the article – often falls short. Ultimately, Amazon needs to live up to customer expectations, or consumers will simply not renew and new Prime membership sales will flatten and decline. Doing anything at the scale of 100 million+ is hard — even for Amazon.

David Weinand
BrainTrust

I’ve had similar issues with Prime. Several times the two-day promise is muddled with other variables and ends up not being two-day. However, there are also occasions when the two-day becomes one-day. I think Amazon is smart enough to know that the volume and number of SKUs they are now shipping will create problems in keeping the two-day promise – which is why other services have been added to increase value. They’ve sold 100 million people the drug of two-day free shipping and the added benefits of video, etc. They may lose some that really depend on the consistency of the two-day promise but not enough to keep the Amazon monster from growing.

Mohamed Amer
BrainTrust

I placed my first order on Amazon in 1996 and have been a Prime member since that program’s inception. I came for the two-day free shipping and have stayed for everything else including a very competitive streaming service of movies, shows and original productions that rival Netflix.

Yup, Prime membership offers much more today than ever and I like it!

Jeff Sward
BrainTrust

Can’t say that I am shocked to hear that Amazon is trying to create some wiggle room for itself. Seems they actually want to figure out how to make money in the retail business one of these days. I know that in my household the annual membership fee is a fraction of what we save on shipping per year. Amazon has become the default store for what I have previously called replenishment purchases. Mission accomplished on Amazon’s part. But brick-and-mortar will remain the go-to for anything other than basic household products, or products not available locally.

Ken Lonyai
BrainTrust

In 1997 Bezos promised to “focus relentlessly on our customers.” Every word that is added to the fine print of customer agreements contradicts that.

Nothing surprising here. As a merchant, Amazon has reached a level of maturity. Two-thirds of sales are from the marketplace vendors. Amazon’s own merchandise is often more expensive than alternative sellers. So, on the whole, it seems that the company believes its momentum and reputation will carry it over the surreptitious little grabs it takes from customers’ wallets and experiences. We’ll see.

Art Suriano
BrainTrust
For me, Amazon Prime is more about streaming than free shipping. However, as with any company, the bigger they become the more problems and challenges they will face. Nothing lasts forever, and even Jeff Bezos is aware of that with himself stating last month that he feels Amazon will one day go out of business. Look at all the giants through the decades that reach their peak and then fizzle out. AOL was once unstoppable — who does dial-up anymore? eBay was an addiction. When was the last time you browsed that site? People change, needs change, new services, and concepts become available, and it is only a matter of time before Amazon faces some substantial challenges that one day may make them no longer the kingpin they are today. However, I don’t see that day coming anytime soon. In the meantime, we as customers have to accept the bad with the good and even though there are times when dealing with Amazon may be frustrating, it’s still a company giving more good to its… Read more »
Gene Detroyer
BrainTrust

Art, to your point about how nothing lasts forever — in the last 35 years, just over 80 percent of the S&P 500 companies have disappeared.

Chris Petersen, PhD.
BrainTrust

No one is too big to fail. A number of sources are documenting how customers are increasingly disappointed about “false promises” on Prime two-day shipping, especially for the holidays. There are a number of chinks in Amazon’s armor, and they are not just Prime. One of Amazon’s core value promises has been customer reviews. There have been numerous reports on how many reviews are fake. Numerous sites are popping up where positive reviews can be purchased for $1 a piece. Yes, Prime offers services more than shipping. However, it is part of the whole that comprises the brand value and the Amazon experience. Tomorrow is day one — and Amazon will be judged tomorrow first by whether the kids’ gifts get there on time.

Nikki Baird
BrainTrust
I have noticed that I am getting more “Sorry, your shipment will be delayed” notices, not just for the holidays, but over the last year in general. But I’ve also unexpectedly received packages on Sundays, and in less than 24 hours. The reality is, $119 even just for free shipping in general, let alone two-day (let alone everything else you get with the membership), is still worth it to consumers, and there are plenty of rumors that abound that even with the additional loyalty that Amazon gets from Prime shoppers (and the membership fees), it does not offset the shipping costs those shoppers generate. And I am definitely guilty of that — placing an order, and then within the same day, placing yet another order. Why not? The shipping is free, and whether it gets here in two days or four, it’ll still get here faster than most other places I might order from. Amazon is simply facing the reality of the monster they created: a consumer who expects fast shipping free, when executing on… Read more »
Gene Detroyer
BrainTrust

Nikki, I didn’t mention the convenience of placing multiple orders in the same day. Good point. We do it often. Run out of Q-tips, place an order. Later in the same day, need ink for the printer, place the order. That evening, need toothpaste, place the order. Nothing more convenient.

Phil Masiello
BrainTrust
Prime is not just about free two-day shipping. And some parts of the article are correct. Seller-fulfilled Prime (third-party sellers) does not work the same as when Amazon ships the product. But Prime has evolved to offer so many more benefits that to just focus on shipping is not doing the program justice. It offers: Prime Now – free two-hour delivery in the available markets, which is a great benefit for food shopping; Prime Video – Free movies and shows; Prime Pantry – $40 minimum. If you are not buying at least $40 worth of products, why bother ordering?; Alexa deals, Whole Foods deals, music streaming, free e-books, free magazines, free Washington Post, free audio books. Just to name a few. As a retention tool, I think Prime is a very strong program. As an Amazon expert who manages many accounts for brands, it is a driver of sales for the consumer. The difference between a product listed Prime and one that is not is eight to one in terms of sales. Maybe the author… Read more »
Richard J. George, Ph.D.
BrainTrust

As noted, the current Amazon Prime offer is leading to confusion and some customer dissatisfaction. Amazon is constantly testing new technology and logistics options, which in the long run should address some of these issues. From the customer’s perspective the system needs to be less confusing (less/no fine print) and more streamlined. However, this article has to been considered in the context of other data e.g., New York Times, highlighting Prime’s success.

The question still remaining is Amazon’s ability to move some of its customers, Prime and otherwise, to a BOPIS model, using Whole Foods and other pickup points. According to data from Adobe, Inc. BOPIS orders increased 47 percent from November 1 through mid-December. It appears that customers are gravitating toward this option and it’s something that I’m certain Amazon is trying to figure out to address its Prime customer base.

Cathy Hotka
BrainTrust

One of Amazon’s great strengths is its talent for free publicity, and here we are again. Lost in the discussion here are families like mine which get free shipping without paying for Amazon Prime — but then again, we never shelled out for cable, either.

Ken Lonyai
BrainTrust

Cathy great points. So often the “need” for two-day shipping is a perception manifested in customer minds because it is available. In reality, $25 of merchandise will get them free shipping that sometimes arrives in two days anyway. And don’t get me started on the bottom of the barrel free Prime movies…

Gene Detroyer
BrainTrust

For me and more for my wife, Amazon has never missed a promised delivery date. Yes, sometimes it is more than two days (for non-Prime vendors), but you know that up front. Then there are the surprises like expecting two-day delivery and getting it in one, or even same-day. It doesn’t happen often, but it happens.

In today’s e-commerce world, free shipping and two-day delivery is almost irrelevant. That is the ante for every serious seller. What Prime offers is everything else. (Though free shipping almost worldwide is a big benefit to us.) We probably watch more TV shows from Prime than any other offering. Whole Foods discounts add up surprisingly quickly. Free reading on Kindle. The Washington Post.

And what I personally like most is that it is the place to go to get the job done quickly.

Liz Adamson
BrainTrust

First and foremost, Prime is a loyalty program. Get customers to pay a fee for a long list of benefits, use their shopping data to remarket and pull them back for more. Free two-day shipping is still a staple of Prime membership, most products on the platform are Prime eligible, and the vast majority are delivered within two days. On the other side, retailers who sell on the marketplace see almost an instant uptick in sales when their products become eligible for Prime.

Ananda Chakravarty
BrainTrust
Amazon provides an ecosystem of services and has been touting (and adding to) this system regularly. However, the fact that it succeeded with retail shipping options should be an important indicator — most users are not after the ecosystem. The ecosystem benefits are not as mission critical as getting a package delivered. I also believe adoption is slowing down. Beyond 100 million worldwide, developed nations don’t have the population density and the U.S. adult population of 279 million has almost exhausted the segments that can afford Prime. Places where Amazon is putting its efforts such as India blocks out huge chunks of customers that cant afford $119 per year — but it’s a sizable market. Based on current data, it seems growth has slowed but continues — the challenge for Amazon is to maintain reliable service across its Prime base. Customers will realize if they’re not receiving packages in time, and they will self-select whether they stay in the Prime program. More importantly, it deteriorates Amazon’s marketing message and pulls back on things like same-day… Read more »
Doug Garnett
BrainTrust

Amazon now suffers the downside of the vaunted independence of its projects. There was a turning point — probably two years ago — when “what’s best for Prime” began to conflict with “what’s best for Amazon.” The Prime program layered on more and more “benefits” while losing its grip on the core value: shipping.

Is this a serious problem for Amazon? Absolutely. Financial reports are showing increases in Prime revenue far smaller than the dramatically higher increases in shipping costs. Add to this Amazon’s moves which indicate focus on attempting to make profit on retail-like sales and Prime’s success is now a problem for them.

Will that mean a decrease in Prime subscribers? Not rapidly. But there’s a lot of online discussion about how poorly Amazon performs on shipping promises relative to Prime. So it will come — not with a bang, but a whimper.

Ryan Mathews
BrainTrust

Full disclosure: I am a Prime member and have been since Day One. I think Prime has outgrown shipping and its real value is the suite of services available to members. For me, it’s fine because I recognize the difference between Amazon and vendors selling on Amazon, but that requires a consumer with the patience to read carefully. Clearly, Prime is the vehicle Amazon has chosen to drive loyalty among its best customers. Are there problems? Of course, but those can be overcome if the pricing remains “reasonable” and the options increase. As to the retention challenge, that is going to occur when customers blame Amazon for the practices of third-party sellers — a not insignificant risk — or if the economy takes a rapid downturn.

Camille P. Schuster, PhD.
BrainTrust

Amazon Prime offers a variety of benefits and different benefits have priority for individual customers. In addition, delivery from third parties is not under the same control as delivery from Amazon warehouses. Given the number of people using Prime, the number of items that can be purchased, and the variety of customer locations, logistics is a complicated issue. All of this means Amazon has an increasingly difficult time keeping its promise and customers care about the promise not the difficulties Amazon faces.

As with any company, growth creates a challenge in terms of living up to its promises. For a company built on the premise of meeting customer needs this is a significant issue for them to resolve.

James Tenser
BrainTrust

For me, Amazon Prime benefits just barely justify the cost — for now. Original TV programming is probably my favorite “goodie.” I make very few purchases where one or two-day shipping is even important. It’s very convenient for simplifying “taps” when placing mobile orders.

I have a hunch that the delivery speed “hook” that gave Prime its rapid acceptance may be a lot less special now, as nearly every other online seller is hewing to similar standards.

Every digital retailer is removing “friction” from their ordering and fulfillment processes. Even free shipping is more or less unremarkable. Keep an eye out for the Chinese retailers who are creating engagement with gameification.

I figure Prime will need to keep innovating and redefining its value proposition to keep ahead of the curve. So far it’s done OK, but as is said here, the “fine print” is getting very intricate and the alternatives are getting more compelling.

Harley Feldman
BrainTrust

Amazon Prime has two purposes beyond two day delivery, keeping customers thinking about ordering from Amazon due to the Prime fee they pay annually and providing a guaranteed revenue stream to Amazon. Amazon should get back to the original intent for Prime as this was the promise at the time, or they will lose some customers over time if the promise is not kept. As other retailers continue to offer same day or next day delivery, the distinguishing feature of two day delivery for Prime will diminish in value and customers for Prime will be lost.

Ken Morris
BrainTrust

While many people got hooked on Amazon for its free two-day shipping, Amazon has become an amalgamation of abundant services that keep customers hooked. Amazon has its issues and missteps, but consumers forgive and forget. Consumers still start more than 50% of their product searches on Amazon and many feel that it is the best place to compare prices and find the best deal.

The convenience of Amazon has changed shopping and will continue to change the future of retail. Love them or hate them, they are here to stay.

Shep Hyken
BrainTrust

Amazon May be the biggest influence in the concept of “free shipping.” As Prime membership continues to grow, there has been some changes. First and foremost, the membership gives you much more than just free shipping. That is what keeps people coming back. The additional benefits are far more valuable than just free shipping. As Amazon opens up to other retailers, the original concept of free two day shipping has changed. Regular customers understand this, and they are willing to continue to do business with Amazon, because Amazon is still a retailer that is easy to work with and continues to create extreme consumer confidence.

Bill Friend
Guest

I’ve had similar frustrations with Amazon as I came for the fast free shipping (which is now table stakes), but stayed for Prime Video. The bundle strategy makes sense but the marketplace and third party seller side of the business is a weak point from a price and delivery perspective. Look for more competition from Walmart and others here. Even with that said, the size of their assortment is tough to compete with and even tougher for them to keep the two day promise.

Tony Orlando
BrainTrust

Amazon has carved out a huge following, and in their wake are thousands of main street businesses that are all gone. They are beyond huge, and provide some damn good streaming services, but now that they control a large chunk of online; and the prices have crept up as my wife found out doing some comparing lately. Either way, they still dominate, but for those who use them, I’d suggest checking around your local stores. Many times you will see some great values that may match or beat Amazon. Your main street merchants will appreciate your support as well, believe me.

Merry Christmas, and Happy Holidays to all.

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Braintrust
"Amazon is simply facing the reality of the monster they created: a consumer who expects fast shipping free."
"So often the “need” for two-day shipping is a perception manifested in customer minds because it is available."
"Prime has evolved to offer so many more benefits that to just focus on shipping is not doing the program justice."

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