Amazon Raises Shipping Costs To Get More Subscribers For Prime

Amazon Raises Shipping Costs To Get More Subscribers For Prime

Amazon is about to make a power move in the global market, and this time, it is targeting its customers, not other companies. For those have been enjoying the benefits of shopping online at Amazon’s global online marketplace, you may need to consider just how much you use it unless you have a Prime membership.

In a report by Wired, as also confirmed by an Amazon help page post, the company is now raising the minimum purchase requirement for its customers that do not use Prime membership shipping benefits.

For those of you have been living under a rock for the past several years, Amazon Prime membership gives you exclusive access to their streaming video buffet, as well as free 2-day shipping on qualifying orders from Amazon. For those who do not have Prime membership, you have been stuck in the minimum purchase realm of at least $35, which also means you had to wait 5 – 8 business days to get your order.

Now, Amazon has raised the rates of its non-Prime subscribers free shipping criteria. Instead of the previous mentioned $35 minimum order requirement, you will now have to spend at least $49 in order to qualify for free shipping on your items. That’s a $14 increase in minimum purchase in order to get your products shipped to you from Amazon.

Although there certainly are some advantages to having an Amazon Prime membership, there are still many people in the country and around the world who do not use their streaming video apps on their TVs. That also may not be due to a lack of interest, but rather a lack of technology. In order to watch their video on your TV, that would require you to either buy a Smart TV, a Smart device, or stream it on your PC.

For some people, the benefits of Amazon Prime membership just do not add up, nor are they logical for their personal purposes. Prime costs subscribers $99 a year, and it is a buffet style of membership for all of its benefits. Essentially, for those who do not use the streaming benefit, it is basically a membership into a club that allows you to shop at their store.

Of course, that only seems to indicate that Amazon sees their offerings as a seller’s market. It also indicates that they must be doing something right if they are to take such a bold move as to raise the minimum purchase requirement on their customers.

But it also seems to be an indication that they are really trying to boost their presence in the online marketplace with its Prime offering, using it as a major tool to shore up their business model.

Amazon certainly isn’t hurting any in the global market. It reported that their paid Prime memberships increased last year in the domestic and international market by 47 and 51 percent, respectively.

But here is the other side of the equation. Amazon also has to make good on those Prime memberships by handling all shipping costs, which are two-day delivery. That put their costs at $1.8 billion last year, which is by far their biggest expense.

Suffice it to say that Amazon is simply passing on the cost to their non-Prime customers by increasing their threshold to qualify for the free shipping. It is also a push to get these customers to sign up for Prime membership now, which essentially puts Amazon in the winners’ circle either way.

The simple truth is, Amazon’s costs will be covered one way or another. So, if you’re a frequent Amazon shopper, then it may be to your advantage to sign up for Prime and simply eat the added cost. Otherwise, you might get stuck with excessive shipping costs.

[Photo by David McNew/Getty Images]

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