Amazon to Raise Fees as Revenue Disappoints
nytimes.com
nytimes.com
I am a heavy Prime user.
I understand and accept the price raise, but as the article quotes "The more expensive Prime is, the more they are going to have to live up to their promises."
One promise that I feel is broken every day is on display with the "Add-On Items"
These are just annoying.
They show up in "Prime Only" searches and are typically <$5.
Which I understand Amazon really can't ship for free.
But there is literally no way to check out with just that item until you add up to $25, and it's typically stuff I actually need quickly.
Take thumb tacks.
They show the first result as $2.48 "add-on" for 100 of them.
Or you can select another package of 100 for $6.05 that IS actual Prime and shipped in 2-days.
The "add-on item" is just a confusing concept, that makes me - as a consumer - feel like Amazon's "2-day free shipping" promise is broken on a daily basis when I see these results.
Hide the results from me, show me how to hide the results, or charge me $2.00 extra to ship "Add-On Items" and problem solved.
But otherwise it's a constant reminder that Amazon hasn't kept their promise that I originally signed up for, even though I believe their intent is to offer more selection to consumers.
Amazon may well have decided to create the add-on program in lieu of removing them, but "wouldn't even exist" isn't the entire truth, as it doesn't acknowledge the fact that the items did exist before.
You are not too cheap to buy Prime, you just don't purchase enough from Amazon to make Prime worth it. A "cheap" person who uses Amazon a lot always has Prime, otherwise they are just throwing away money on shipping.
Once you start buying many items from Amazon, Prime easily pays for itself at the current level. And will pay for itself at the next level too after a certain use
The reason you are annoyed by add-ons, is because you came to rely on Amazon for things you can and probably should by in neigbourhood store. I would buy thumbtacks and such things in dollar store acros the street.
I am similar in that I buy common things from Amazon, I like how it is organized and it makes sense to me when I order.
That bottle of melatonin, $7 on Amazon, prime add on.
$15 at the localish drug store that's a 5 mile drive each way. Yes, that's the closest store.
It's incredibly annoying.
Also, smya 107 helicopter tail booms w/motor, $4.00 prime add on, $4.00 shipped free from HK with a 3-4 week delivery time. Kid wants it fixed. Might as well just buy it, and another copter just to have spares around and to hit prime shipping.
Just let me pay shipping. It's worth it. Anything else is just a big fu. They've got the item, I've got the cash. Let me use it.
Lately even those, 'China Post' packages arrive fairly quickly within 3-5 days which is amazing.
I've got a couple batteries on order that I ordered before Kid burned out the tail motor that still haven't arrived. His came with a bunch of spare plastic parts, but not the electronic bits. Some day I'll replace the rotors and he'll see what undented leading edges can do for him.
I've gotten a bunch of stuff through China Post shipping, and never had them faster than a couple of weeks.
I also feel the SmartPost shipping is a broken promise. SmartPost almost always turns out to be 3 day shipping. 2 days from Amazon to the post office, then 1 day from post office to me.
Imagine if I could have them consolidate those shipments; Get a weekly shipment for most items, or get it via normal prime when it's something I really need fast.
One order may need to go by air if it's at a distant warehouse, but another may go ground because it's available close by.
I'd like it solely for the convenience--several times I have wanted to order something but knew I would not be in town when the delivery happened. I'd love to say "deliver it to me next Wednesday" and Amazon figures out the cheapest way that would work instead of having to remember to make my Prime order on Monday.
From http://www.amazon.com/gp/help/customer/display.html?nodeId=2...:
FREE No-Rush Delivery (typical delivery one week after placing an order). Note: You may receive promotional credit for selecting No-Rush Shipping. Credit will be automatically applied to your Amazon.com account once the first package from a No-Rush Shipping-eligible order ships. You'll receive an e-mail as soon as the credit is available. You may select No-Rush Shipping as many times as it's offered to you, but you won't be eligible for the credit if you cancel your No-Rush Shipping order or return items from it.
And from their forums: "You get a $1 mp3 credit if you choose the slower shipping option."
Even with these add-on products Amazon is basically forcing you to adopt a Costco / buy-in-bulk model, and I think it's the only profitable and sensible direction.
Logically speaking, I would think this would actually be the fastest way to fulfill orders. Find the closest distribution center that has your stuff in stock and ship it.
The ten day delivery is a bit disconcerting for sure though.
I see what they are trying to do, namely get you to cough up $20 more to buy things you 'may' need but not yet (or ever) to increase revenue but it just feels particularly scammy.
I don't see how they think going from $80 to $120 per year for Prime will not cost them customers. We just subscribed last year (after being customers for several years), and I was still hesitant to do it then, because we only take advantage of it when we spend < $25 (we rarely use Prime video).
I'm thinking there are many in the same boat, and those are the customers they will lose.
Amazon has always been very careful to make exactly as much profit as they choose to. Their sales volume is huge enough that they could probably raise an extra $500mm by tweaking their pricing algorithm without anybody even noticing, instead they have increased prices in the most visible way possible. This has to be about sending a message, not about making money.
I have a very, very hard time believing that the people running Amazon would do that.
Example: I can buy Nest Protect on Amazon for exactly the same price as it is from my local Lowes. However, with Lowes I get the ability to return it at any time for any reason, in person, without the return shipping price or hassle. I'm going to buy it from Lowes, where in the past I would have just used my Prime account to buy it from Amazon.
You have always been obligated to pay sales tax on purchases in California, its just that seemingly most people lie on their taxes and dont pay it.
It reminds me of a deli that was quite popular in Mountain View years ago. Incredible food, great employees, very loyal following. Around the time he was finally considering retirement, the prices went up from at or below Togos/Subway prices to what you would see these days at any of the popular New York Jewish delis. He justified it in -- "I can and it was about time." People still kept coming, it was a much loved institution.
Like the deli, there are many Amazon Prime users that love the convenience and will probably not really bat an eye at the increase. Those who joined more recently or do not use things like Prime Video, may feel otherwise.
But I wonder if this is intentional beyond increasing fees. Maybe Amazon is trying to reduce their growth rate a little bit to help ease the rate you need to scale support infrastructure. e.g. something with slow real-world constraints like acquiring leases or real estate for warehouse space.
However, I'm not sure you're the target audience for Prime. I place a very high value on fast shipping. Before Prime, I frequently paid for 2-day shipping anyway, and occasionally full-price overnight shipping. Their free shipping over $25 is way too slow for me, it's not a viable alternative.
I got it originally for free as a college student, then they kept giving me half off discounts when it was time to renew. I don't know what I paid last time I renewed.
Even at $120 I'll still pay for it. It's an awesome service and I get way more than $120 value out of it. I never watched their videos either, but Betas and Alpha House are actually pretty good.
They believe that having a product in-hand tomorrow is worth the 8.5% extra charge for tax, but that's rarely the case for me.
Lots of Amazon streaming apps (off the top of my head, the TiVo app) only support normally purchased content, not the free Prime streaming; and other platforms (say, Chromecast) don't have apps because (I'd assume) they likely don't fit into the ecosystem that Amazon wants you to exist in - namely, Kindle-based devices.
In other words, I'm actually considering dropping Prime because (among other reasons) Amazon's attempts to push related products and systems reduces the utility I can get out of Prime Instant Video.
I for one have observed that I have bought more things since I have had prime shipping. There is something to be said for the quick response to your order in the form of 2 day delivery.
Unless this changes soon, I am likely to let my Prime membership expire, as it has become useless to me because it is no longer reliable. Any attempt to raise the fee while still using USPS for last mile delivery will be met absolutely with cancellation.
That said, if they raised the fee and promised to use only reliable (e.g., UPS, FedEx, hell, even Lasership/OnTrac), I'd take the deal.
subscription use that damn innovations to save them 25 cents or whatever from ups coming to your door (which actually I am okay with but it adds a day)
I've never seen a regular prime delivery use innovations.
I can completely understand why some people might not feel it's worth it, but IMHO $10 a month for a sizeable video library isn't out of whack with the rest of the industry.
1) Those who use it for the free shipping
2) Those who use it for the non-shipping services, like the video offerings and the Kindle lending library.
There is probably a healthy percentage that use it for both, but I wouldn't be surprised if it's below the majority.
I think the people in Category 2 are more likely to be willing to accept the higher fees than those in Category 1, for the reason you mention. Compared to, say, Netflix, this is still a decent deal.
Unless sold by a third party vendor, I've not seen anything to that effect, and Amazon is still cheaper with its prime items than buying locally (or even from other online shops, frequently).
I don't use any of the other prime benefits besides shipping.
Anyways, I probably can't justify $120 a year even though it is not really much more than the $80 I am paying now. I believe when prime first came out it was $50.
I still have it, and I've never let the service lapse, because I now do the majority of my shopping on Amazon. I buy everything from cat food to toilet paper, and I buy a lot of things (like DVD/Blu-ray) that I never previously had the motivation to go to a store to buy or that I don't have the ability to transport (like shelving units and chairs). It's supercharged my hobbies (electronics and 3d printing), and saved me days in back-and-forth to stores.
So I suppose I'm one of those customers that can easily justify the $120, and would be more than happy to pay more, especially if it means that Amazon will put a little more effort into faster delivery.
One thing I'd like to say about Amazon's position of strength is that if you look at a competing service like ShopRunner -- to which I was given a complimentary one-year membership, which just ended -- Amazon is a beast in comparison.
I mean, even with the free ShopRunner subscription, I was still buying from Amazon more than from ShopRunner merchants, simply because Amazon is a huge department store with practically every retail category well represented, whereas ShopRunner is largely a collection of specialty stores.
Is this necessarily a good thing, though? I mean, the more power Amazon has, the less competitive it needs to be, right? That's why I have mixed feelings about using Amazon for most of my online shopping needs; I don't want to be contributing to a situation where all of the "little guys" are edged out.
A day later and it's back to being down 10%. Wall Street has had some nutty volatility lately: https://www.google.com/finance?q=amzn
Boy I was wrong.
Let's be honest here, Netflix has some series and NO movies. yeah, it has a few, but mostly crap or things i've already seen.
amazon instant prime is 10x worse. and netflix was bad enough already.
And besides no content, the Wii client i use, i take roughly 5min to start to watch something in my playlist! the loading times are Horrible! and the constant interruptions in streaming convinced me to not even look into their cloud services.
I will agree its mostly crap though. I cancelled my subscription a while back, but I think I'd pay $15/month or so easily if they could increase their catalog.
In my experience, a significant portion of the deliveries
take more than the advertised two days.
I moved last fall from NJ (close to two Amazon warehouses), where I almost always got deliveries the very next day, even for orders placed late in the evening.
In my new home near Austin, TX, it's always two days or even longer.
Seeing as you're here on HN, you might be interested in one of Amazon's two original TV series, "Betas". It's a comedy about a social mobile app startup going through a YC-like incubator, followed by a demo day, attempting to raise funds from VCs and angels, while spurning buyout attempts from a caricature of Zuckerberg and avoiding hit-pieces in Valleyswag.
I was still thinking about getting back Prime for $79 as I enjoyed Alpha house and as a member of Amazon Preview, I have a bit of knowledge about their future productions. But a $40 increase would be too much for me at least. Might consider in Summer again based on how my 6 months without prime will go.
Does Amazon really make no profit? Or do they just have some creative accounting techniques that means they never declare their profits to avoid possible taxes?
Consider the case of the bookdepository.co.uk, purchased by Amazon in 2011. Not only does the bookdepository match most of Amazon's book prices, they offer free worldwide delivery too. Yet, unlike Amazon, they are profitable.
Considering this about face on some of their more beloved policies, I'm wondering why people are saying this is the way of the future.
Btw, keep in mind that Prime also gets the rough equivalent of a FREE Netflix streaming account.
I have to assume this is so people only use the "prime" checkbox to try to find free shipping.
What you're looking for is "they raised the price for when you renew next year."
I also liked the shipping - but now that I have seen Paris at $75 will I want it at $110?