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Amazon Prime

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Amazon.com has long had a free ground shipping option at the $25 mark for most regular-sized products. This has entailed much wriggling and tweaking to cross the mark and get the free shipping — who likes to pay for shipping, anyway?

Amazon has now introduced a new program — Amazon Prime — that provides free second-day shipping (“All You Can Eat” Express Shipping) on most items without any minimum shopping requirements or bundling needs (combining items into lesser shipments). This is available at a price of $79 a year. Overnight shipping under this plan will be $3.99 — which is again much less than normal.

Current shipping models and rates will continue outside this program — for now.

The implications of this program are enormous. Firstly, evidently Amazon is able to better leverage pricing with the shippers — allowing them greater flexibility in the order fulfillment process. Look for Amazon to acquire/embrace a shipping company — this would mean near-complete vertical integration and even greater cost efficiency.

Secondly, for frequent shoppers (like me), this can work out to pretty good savings. (I am currently working out an Excel on break-even purchasing.)


Amazon Prime at work

It also further extends Amazon’s utilization of their single-click patent. If signed in and using the Single-Click option, you see additional buttons for Prime purchases, although you can add to the shopping cart and apply the Prime option later too.

Finally, it should drive up sales for Amazon — people will be more inclined to buy if they can pick up the odd book or two without having to jump through hoops to get it shipped fast and free. Furthermore, this is a lock-in — once you’re signed up, you’d be nuts to shop elsewhere for most products.

The signup price is steep — and adoption rates may be low initially, until the value is perceived.

Update: I worked out some numbers that would make this palatable. Using the Amazon shipping rates for 2-day shipments, and assuming purchases of books, movies and CDs, with an occasional electronics purchase, it would take a purchase volume of 25 books, 15 CDs and 2 electronic items (approx 6 lbs per item) to cover the cost of approx $76. Alternatively, it would take about 4 shipments in the (slower) Super Saver shipping scheme. So if this works for you, give it a shot.

shipping

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  • http://narkoleptik.blogspot.com Narkoleptik

    Sounds like a pretty good idea, they’ll have people coming back for more. I may actually cough up the 80 bucks.

  • http://selfaudit.blogspot.com Aaman

    Great slashdot discussion underway – this caught my eye (link to /.

    Amazon Prime? (Score:5, Funny)
    by techsoldaten (309296) * on Wednesday February 02, @03:25PM (#11555015)
    (http://www.trellon.com/ | Last Journal: Monday November 08, @04:54PM)
    Does Amazon Prime compete with Optimus for leadership of the Autobots?

    Perhaps he is the UPS truck to Optimus’s tractor trailer?

    M

    [ Reply to This ]

    Dunno… (Score:0)
    by Anonymous Coward on Wednesday February 02, @03:34PM (#11555106)
    …you can ask Optimus [wkyc.com] yourself.

    [ Reply to This | Parent ]

    Re:Amazon Prime? (Score:0)
    by Anonymous Coward on Wednesday February 02, @03:43PM (#11555214)
    Yeah they do compete. Remember from family
    Peter: Optimus Prime? He’s Jewish!

    [ Reply to This | Parent ]

    Re:Amazon Prime? (Score:1)
    by dabigpaybackski (772131) on Wednesday February 02, @03:47PM (#11555282)
    (http://www.antiwar.com/)
    Does Amazon Prime compete with Optimus for leadership of the Autobots?
    Don’t be silly. Optimus’ authority is beyond dispute, and Autobots never fight Autobots.

    I am offended by your Decepticon-ish post. Did Starscream put you up to this?

    “OH SHIT, THERE’S A HORSE IN THE HOSPITAL!”

  • galaxyfan

    The breakeven analysis is inaccurate because it only includes the “per item charge” and there is also a shipment charge. For example if you order only book for second-day air the shipping charge is $7.49 (each additional book in the shipment would cost an additional $1.99). So if you order 10 books in a year in separate shipments you would be ahead with the Prime Membership. For me it a great deal because I make way more than 10 orders per year; mostly because you also never pay any sales tax with Amazon because they are based in Montana – and you likely live in a different state.

  • http://the-between.blogspot.com/ Joel Caris

    galaxyfan,

    They’re actually based in Washington. I know this because I also live there and I’m bitter every time I place an order with them and have to pay tax.

    Which is silly because I have to pay tax when I buy things anywhere else, too. But still.

  • http://selfaudit.blogspot.com Aaman

    galaxyfan, you are correct, but I preferred to keep it simple. My main beef with a program of this nature is that it actually benefits big shoppers (like me), who are expected to pay for the privilege of being big shoppers – they should be coddled and rewarded. Many other sites regularly provide free second-day shipping to everyone.

  • Scrub

    Amazon keeps records of all your purchases for the last few years online for you to examine. All you have to do it look at your spending habits to see if it’s worth it to you.

  • rayguy

    Amazon gave me a free trial….it is awesome. I am very frugal…however I am trying to come to terms with the fee. Hmm, I wonder if Amazon would entertain a yearly thing….join the Prime and if you spend a certain amount, a portion/all is refunded…..

  • http://selfaudit.blogspot.com Aaman

    I’m totally in love with Amazon Prime – redefined my shopping habits online, perhaps an update to this post is due

    I believe you can get a refund on your fees, but recommend you check with Amazon (link above)