Amazon quietly changed its shipping policy without any press release. Free shipping standard is changed from $25 to $35. This change in shipping policy seems to disappoint customers who only buy some cheap things form Amazon. Some customers may change their mind to consider whether they will buy things from Amazon or from other ways. As estimated, Amazon loses $11 per person by changing this policy. However, in fact, the move will maybe boost Amazon’s sales.
The prime members doubled in lessthan two years. The prime members who pay $79 annual fee have unlimited free two-day shipping. Also, they have attractive prime service of using Kindle lending library and watching videos. Amazon will convince more people to be its prime members since it is lucrative. Changing free shipping standard from $25 to $35 triggers more people to be Amazon prime members. It is because if a person is a prime member, he will buy much more things to achieve his money’s worth with the free shipping.
In the long-term, I believe Amazon will gain more profit than before, since changing the shipping policy aims at stimulating more customers to be Amazon prime members. Amazon takes the advantage of consumer psychology to generate more loyal customers. Tempting services Amazon offers is attractive enough to maintain an increasing numberof customers of longstanding.
Resource: http://business.time.com/2013/10/22/better-add-more-stuff-to-your-cart-because-amazon-just-made-it-harder-to-get-free-shipping/
nice , vvn
This may also be a move by Amazon to retain and acquire new vendors. We were approached by Amazon to become a vendor with them but we could not match there required shipping rates and still maintain profitability and so we declined. It is important to note that there is no such thing as “free shipping” the shipping costs are just buried in the cost of the item. By increasing the threshold of the free shipping costs to $35 they allow there vendors to squeeze out a few more dollars of margin.