| Sun Feb 2 2014 17:01:03 |
What Price Would You Pay for an Amazon Prime Membership?
By: Julia Wilkinson
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Amazon recently released its fourth-quarter earnings, and while it had a "record-setting holiday season" for Amazon Prime, adding an impressive 1 million-plus members in the third week of December alone, its fourth quarter revenue growth of 20% fell short of expectations, and was less than the revenue growth for the other three quarters, which ranged from 21% to 23%.
The Amazon Prime membership, which currently costs $79 a year and comes with two-day free shipping for qualifying items, is hugely popular. In fact, in December, Prime was so popular that Amazon limited new Prime membership signups during peak periods.There are tens of millions of members worldwide, although Amazon doesn't give an exact figure.
But maybe all those members ordering all those items are becoming a little too expensive: Amazon said in the conference call that it may increase the cost of its a Prime subscription by $20 to $40 due to higher fuel and other shipping costs.
This had Amazon merchants in at least one forum speculating how a price hike might affect their merchant-fulfilled vs. FBA (Fulfillment-by-Amazon, where items sent in by merchants are eligible for Prime free two-day shipping) sales. Others wondered how much was too much of a price hike to keep people signing up and seeing the value in the service?
One speculated that the $100 threshold was a key tipping point. The $99 price just shy of that would be on the lowest end of the increase Amazon disclosed may be on the horizon. And of course, a $40 increase would put the price of the service at $119.
I'm wondering how much would be too much of an increase for you? Are you a member of Prime now? If not, why not? Do you buy other things on Amazon, or not at all?
As for me, I'm one of the happy masses who paid $79 for the membership. I use the free streaming video service some, but mainly I find many reasons I need things within the two-day window. What are people buying with Prime? wondered one seller. Pretty much anything, answered one user of the service. Kitty litter, for one thing. One seller who ordered a single pie server with the service speculated this particular shipment was not cost-effective for Amazon.
It's a natural for embarrassing stuff that people don't want to buy at a physical store. In this ECB article on Winning Amazon Strategies, Part One, seller Steve Lindhorst said he sells a lot of condoms and enema kits.
I haven't ordered kitty litter yet, but come to think of it, I hate buying that stuff at the store. Maybe I better go check that out now, before the price goes up.
How much would you pay for a Prime membership? Do you think the memberships are worth it? |
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