Amazon’s mobile app and website now features a curated "$10 and Under" section, with small, inexpensive items in the e-tailer's women’s, men’s, electronics, gifts, home décor, household and watches categories. "$10 and Under" is available to all Amazon customers, Prime and non-Prime, who benefit from the free shipping offered on products in the section, according to Amazon.
Amazon launched the section without fanfare. "Amazon is always innovating on behalf of customers and ‘$10 and Under’ is our newest means of delighting customers who love a great value," an Amazon spokesperson said in an email to Retail Dive. "‘$10 and Under’ helps customers explore the breadth of low-priced products available on Amazon."
Speaking of Prime, Amazon has raised the rate on its month-to-month Prime membership to $12.99 from $10.99, or by just over 18%, as first reported by Recode. Amazon's website currently lists the new monthly price. On an annualized basis, that makes Prime's monthly rate more than 50% higher than its yearly rate.
"$10 and Under" appears to be designed to highlight products in Amazon’s Fulfillment by Amazon Small and Light Program and to compete with low-cost offerings from Walmart and Wish, as TechCrunch notes. Wish, a mobile e-commerce platform that has built much of its fortunes so far on bringing Chinese sellers to customers in the U.S. and elsewhere, doesn't often pop up in stories about Amazon. But, two years ago, when Amazon registered as an ocean freighter forwarder, Flexport CEO Ryan Petersen noted at the time that it would cut Chinese factories a more direct path to American consumers and said he saw the move as an answer to Wish.
But making it easier for customers to grab low-cost items without paying for shipping is also an answer to Walmart, which last year scuttled its Prime-like shipping membership in favor of free shipping on all orders over $50. "At this day and age, two-day shipping is table stakes, so we don't think we should charge membership for it," Walmart U.S. e-commerce chief and Jet founder Marc Lore said at the time.
That prompted Amazon to also lower its free shipping threshold for non-Prime members (who enjoy free two-day shipping on many items but pay $99 each year for that, along with a slew of other perks). In fact, Amazon, after raising that threshold to $50 the year before, slashed it twice, first to $35 just after Walmart’s move, then to $25 a few months later.
The move in spring 2016 to introduce month-to-month Prime memberships gave Amazon yet another tool to grab e-commerce market share and gave customers another option. The rate hike for that option, though, could reflect the high costs to Amazon of "free" 2-day shipping.
Since its $3.3 billion acquisition of Jet and the hire of Jet founder Lore, Walmart appears to believe that Amazon’s emphasis on Prime has left a segment of e-commerce to be disrupted. In an interview with Retail Dive last year, Keith Anderson, vice president of strategy and insights at Profitero, compared that to cable television customers who'd rather pay à la carte, rather than for channels they'll never watch.
That has sparked a price war, which Anderson says Amazon has time to address. "I don’t think there’s any way over the immediate term, even with the aggressive policies that Lore and Walmart are introducing, that Walmart is going to be disruptive overnight to Amazon’s business — with the exception of pricing," Anderson said. "You have to remember that Amazon’s still outpacing [everyone], and they’re by far the biggest player in the market. Margin compression is the biggest near-term risk."
But it’s riskier for Walmart, according to retail analyst Nick Egelanian, president of retail development consultants SiteWorks International. "This will be a very costly foray for internet novice Walmart, particularly," he said.
Amazon may be protecting its own margin somewhat by offering "free shipping" to non-Prime shoppers who meet the order threshold or order the "small and light" items, reserving faster two-day shipping for Prime orders. That’s in stark contrast to Lore’s contention a year ago that two-day shipping is a given.
The real winners in the escalating fray are shoppers, though Egelanian questions whether it’s a worthy battle for retailers.