Brief

Amazon ups free shipping minimum in Prime push

Dive Brief:

  • Amazon has increased its free-shipping minimum order amount for non-Prime members to $49 from $35. Book orders totaling $25 will enjoy a lower threshold and ship free.

  • The retailer last boosted its minimum order requirement in 2013, from $25 to $35. 

  • The move comes as Amazon continues to face steep increases in shipping costs even as it continues to invest in expanding its delivery options and speeds for Prime members.

Dive Insight:

This increase accomplishes two things for Amazon: raking in a bit more money to cover its mounting fulfillment expenses and giving people yet another reason to join Prime.

Of all the perks that Amazon members enjoy—streaming television and musical entertainment, an e-book lending library, photo storage, among others—the real reason Prime members say they shell out their $99 yearly dues is the free, no minimum, two-day shipping on many items, according to a study late last year by RBC Capital Markets reported by eMarketer.

In fact, the percentage of Amazon Prime members who say they prize the free shipping option the most has crept up to 78% this year from 74% in 2013, far outpacing other perks, according to that report.

Meanwhile, Amazon’s shipping and fulfillment costs, up 37% year-over-year in Q4 to $1.8 billion, are growing faster than its revenue, which increased 22% to $35.7 billion in the same period. But so far it has focused on making moves to make those operations more efficient, rather than scaling back on its fulfillment and delivery offerings to its Prime members.

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Filed Under: E-commerce Logistics