Amazon customers can now get unlimited free two-day shipping—for $79 a year
Online shoppers continue to value free shipping. And Amazon.com continues to find ways to meet that desire. The latest, announced today: Amazon.com Prime membership offers free two-day shipping and $3.99 overnight shipping on orders received until 6:30 p.m. Eastern time. To qualify for those deals, customers pay $79 a year.
Customers do not need to make a minimum purchase to qualify and they do not need to consolidate orders. Up to four persons living in the same household can take advantage of the Prime membership benefits.
Whether customers will see any value in the offer is open to question, says Jim Okamura, Chicago-based senior partner with retail consultants J.C. Williams Group. “Any time you ask consumers to do excess mathematics, it gets complicated,” he says. “And this is an offer you’ll have to figure out.”
In announcing the plan to customers, CEO Jeff Bezos said Amazon expects the membership plan will cost Amazon in the short-run but will ultimately be beneficial because it will result in longer-term customer loyalty.
Amazon already offers free ground shipping to a single address on orders of $25 or more.
Jim Crawford, vice president of consultants Retail Forward Inc., says the offer could have significant impact on how Amazon operates. "It opens up a whole new pricing dynamic," he says. "It lets them compete in price-sensitive categories because it takes shipping out of the equation."
Crawford adds that Amazon`s breadth of products and the loyalty and frequency of its shoppers will make the Prime membership offer difficult to replicate. "It only works for people who make a lot of purchases from a given retailer in the course of a year," he says. It could be copied by Wal-Mart, he says, but probably not by many other retailers. "Most other retailers don`t have the broad appeal and product selection that Amazon has," he says.
Crawford likens the deal to a warehouse club, where consumers pay a membership fee, then feel compelled to shop there to get their money`s worth. "For customers who subscribe, it radically increases the stickiness of Amazon," he says.
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