Will a higher free shipping minimum hurt Amazon.com?
My first question when I saw headlines that Amazon.com was raising its limit to receive free shipping on orders from $35 to $49 was why anyone who shops on the site would not just sign up for Prime? After all, $99-a-year gets you free two-day shipping on most orders regardless of size, plus other perks such as unlimited streaming on select movies, music and television shows.
While Amazon has been pushing to increase the ranks of its Prime members (47 percent growth in its U.S. numbers last year), there are still millions who shop on the site who have not joined the club.
At this point, there seems to be very little that Amazon or its competitors can do to slow the Prime juggernaut. Back in March 2014, Amazon increased its annual subscription from $79 to $99 for Prime members. At the time, most thought the increase would have little negative effect on Amazon, and theories that alternative programs offered by retailers or third-party providers would lead to Prime defections have not been borne out.
- Amazon.com Announces Fourth Quarter Sales up 22% to $35.7 Billion – Amazon.com, Inc.
- Amazon pushes its free shipping minimum to $49 – Engadget
- Is Amazon Prime more vulnerable to competitive threats? – RetailWire
DISCUSSION QUESTIONS: How will Amazon.com’s decision to raise the purchase criteria for free delivery from $35 to $49 affect its business? How important opportunity does this present for competing retailers?