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.)
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.