Free shipping has been one of the keys to Amazon’s success over the years. Now, in a possible bid to nudge more people to become Prime members, the company is raising the cost of the purchase to qualify for free shipping on non-book orders from $35 to $49.
On the company’s website it said:
Add at least $25 of books (in which case all other eligible items in the order also ship free), or at least $49 of all other eligible items to your Shopping Cart. Any item with “FREE Shipping” messaging on the product detail page, that is fulfilled and shipped by Amazon, is eligible and contributes to your free shipping order minimum.
Amazon Prime has been a wildly successful program for the company. Over the holidays, Amazon said that it added roughly three million new Amazon Prime members in one week.
Amazon does not disclose its Prime subscriber numbers. However various third-party analysts have estimated Prime membership. For example, RBC Capital Markets’ Mark Mahaney said last September that Amazon had 50 million Prime customers in the US.
Consumer Intelligence Research Partners (CIRP) estimated in January that Amazon Prime “has 54 million US members, spending on average about $1,100 per year, compared to about $600 per year for non-members.” The firm also estimated that nearly half of Amazon’s US customers (47 percent) were Prime subscribers, or 54 million members.
Accordingly, Amazon Prime members spend more and are more loyal to Amazon. Prime membership also operates as a bulwark against competitors. This raises the question of whether the larger spending among Prime members a function of pre-existing Amazon loyalty or whether Prime members spend more to “get their money’s worth” out of the subscription?
To my knowledge, no studies or surveys have been done on this question. I would imagine, however, that the answer is both.
Postscript: The original version of this article stated that Amazon was offering free shipping on non-book purchases of $25 or more. That number has been corrected to $35 in the first paragraph above.
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