Amazon Prime membership hike by 20% in the US, this would make the Amazon Prime membership yearly fee $119 a year, from $99. This is the second time that Amazon has done this, since the time it had introduced its Amazon Prime membership, way back in the year 2005. Previously, Amazon had increased the price of this membership from $79 to $99, this was in the year 2014.
Very Bold Move By Amazon
There can be no doubt about it, increasing the price of the Amazon Prime membership in the United States of America, from $99 a year to $119 a year, is a very bold move by Amazon. This is because $100 is considered to be a psychological number. And people in America, have been found to be more responsive and more willing to purchase things that are priced under $100. Earlier this year in January, the monthly fee of the Prime service had been raised by Amazon, from $10.99 to $12.99. But the yearly Prime fee was not touched.
Increasing the price to above $100 could mean that Amazon could face severe repercussions. The Amazon Prime membership happens to be one of the most important businesses of Amazon. This Prime membership helps Amazon to build loyal and repeat customers. These customers tend to spend almost double than that of non-Prime customers. Prime Amazon customers spend around $1,300 per year on an average, as compared with non-Prime customers who spend around $700 a year, on an average. But increasing the Prime fee, could adversely affect future renewals and it could also prevent new customers from signing up to Amazon’s Prime program.
More Than 100 Million Prime Members Globally
Yes, all over the world, Amazon has more than 100 million paid members. This shocking fact was revealed by none other than the big man himself, Jeff Bezos, the CEO of Amazon. Amazon owes this record breaking number to various factors such as:
- Same day shipping.
- Prime Day annual sale.
- Prime Video streaming.
- Prime Now rapid delivery program.
What is very shocking is that never before has Amazon ever told the world openly, about the number of Prime members that they have.
Prime Proving Costly For Amazon?
It would seem that the Prime program of Amazon, is proving to be way too expensive for Amazon to fund. And there are a number of reasons for this, such as:
- The number of products that are now available through Amazon Prime via their free 2 day shipping, has increased from 20 million in the year 2014, to over 100 million today.
- Amazon has also launched their Prime Now, a 2 hour delivery service. Prime Now delivers to customers, within 2 hours, certain kinds of groceries, as well as certain merchandise that is available at Amazon and various local merchants.
- Prime members can now stream, that too at no extra cost to them, lots of TV shows and movies, as a result of Amazon going that extra mile and spending billions of dollars, to acquire this gargantuan movie and TV library.
- To meet the heavy demand of deliveries to be made by Amazon to its customers, in order to supplement the deliveries being made by FedEx and UPS for Amazon, Amazon has spent a fortune in setting up its very own logistics network.
Amazon Answers About Price Hike
Amazon spoke about the Amazon Prime membership in the United States of America, from $99 a year to $119 a year. In the words of Brian Olsavsky, the chief financial officer of Amazon, “This is a better reflection of the cost value of the program. The value of Prime to customers has never been greater. Today you get over 100 million products within two days and many, many products within one day, same day or two hours. So there’s all kinds of new features that we’ve continually added to the Prime program.”
So, does this justify the hike in the price of Amazon Prime? Will people react kindly to it? Or will Amazon lose customers in the long run? Wait and see!
Megan Davies is a reporter for White Pine Tribune. After graduating from the University of Toronto, Megan got an internship at the CBC News and worked as a reporter and editor. Megan has also worked as a reporter for Global Toronto. Megan covers economy and community events for White Pine Tribune.
