Amazon is raising the cost of an annual Prime membership in the US from $99 to $119 effective May 11th for new members and beginning June 16th for renewals. The company announced the fee change in a call with analysts to discuss its first-quarter financial results.
Amazon started out the year with remarkable growth
. In the first three months, its North American net sales rose 46% compared to the first quarter of 2017. That's nearly double the growth rate it saw in North America in the first quarter of 2017.
International net sales, which were half that of North American sales, rose 34% - compare that to the 16% growth it saw in the first quarter of 2017.
Third-party sellers are a beneficiary of Amazon's strong quarter. Worldwide paid units grew 38%, and sellers comprised 52% of unit sales.
When asked about the accelerated revenue growth seen in North America for the quarter, Amazon Chief Financial Officer Brian Olsavsky said the general driver continued to be Prime and the Prime flywheel. Amazon sees better engagement among Prime users especially for digital benefits, and "that's always good news for eventual sales of other things."
He also said Amazon is selling premium Prime services such as subscriptions to Music and Kindle Unlimited programs.
But Olsavsky also noted the cost of Prime. "We continue to increase the value of Prime including speed, selection, and digital entertainment options. The value of Prime to customers has never been greater. And the cost is also high, especially with shipping options and digital benefits. We continue to see a rise in costs."
He also noted that Amazon Prime saw a single increase in March of 2014. "Four years ago when we last increased the cost of Prime, you could get 20 million products within 2-days. Today you can get over 100 million products within 2 days and many, many, many products within 1 day, same-day, or 2 hours," he said.
"We continually added new features, it's a different program than in 2014."
The CFO said Prime was still "the best deal in retail" and said Amazon works to make it better and better each day.
Many shoppers have come to rely on the marketplace. When Amazon recently cracked down on buyers
, many were frantic, describing how much they depended on being able to get goods online.
Among the reactions to the fee increase from customers on Twitter: "I'm good with the $119 I suppose but I miss when 2 day delivery actually meant 2 day delivery. I've had prime long enough to remember when they delivered on Sundays." Another customer responded, "I hear you. It's irritating when Amazon lists an item as Prime, & then when checking out, it'll show shipping time as taking 5-7 days. WTH list it as a Prime item?"