Wednesday, February 02, 2005

Amazon Prime 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 any way?

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 fulfilment 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)

Amazon Prime at work

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.

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, not taking into account the per-shipment charges, and assuming purchases of books, music and CDs, 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.


Updates: Slashdot has had an entertaining discussion on this issue. I especially like this bit:

Amazon Prime? (Score:5, Funny)
by techsoldaten (309296) * Alter Relationship on Wednesday February 02, @03:25PM (#11555015)
( | Last Journal: Monday November 08, @04:54PM)
Does Amazon Prime compete with Optimus for leadership of the Autobots?

Perhaps he is the UPS truck to Optimus's tractor trailer?

[ Reply to This ]

Dunno... (Score:0)
by Anonymous Coward on Wednesday February 02, @03:34PM (#11555106) can ask Optimus [] yourself.
[ Reply to This | Parent ]
Re:Amazon Prime? (Score:0)
by Anonymous Coward on Wednesday February 02, @03:43PM (#11555214)
Yeah they do compete. Remember from family
Peter: Optimus Prime? He's Jewish!
[ Reply to This | Parent ]
Re:Amazon Prime? (Score:1)
by dabigpaybackski (772131) Alter Relationship on Wednesday February 02, @03:47PM (#11555282)
Does Amazon Prime compete with Optimus for leadership of the Autobots?

Don't be silly. Optimus' authority is beyond dispute, and Autobots never fight Autobots.

I am offended by your Decepticon-ish post. Did Starscream put you up to this?
[ Reply to This | Parent ]

Boingboing picks up on it - thinks it is a good idea. I'm tempted, too. In fact, everytime I buy a product, I'm going to be doing the math - this might actually complicate my buying decision - never a good thing in retailing.

What really irks me is this should be free anyway - I know of excellent sites like zipzoomfly that regularly give free 2-day shipping to everyone. Amazon is asking you to pay upfront for it. Furthermore, the only ones who will really benefit will be big shoppers, who should be coddled according to CRM, not bound hand and foot.

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