Which is a week faster than Amazon's normal shipping rate. I think Amazon has purposefully made their shipping slower to get more people to sign up for Prime.
But I can't make myself sign up to their anticompetitive BS.
The other issue is that since there is no fixed cost associated with shipping you things throughout the year, do to the the economics of it, the plan must be to your disadvantage. Amazon isn't a charity - the deal is making them money - and therefore on average the consumers are losing out.
Take the 80/yr and split it among all your purchases. Amazon is likely spending less than that on the extra shipping speed.
PS: Hypothetically they could be spending slightly more and decreasing their profit margins in exchange for higher volumes (b/c now that you spent your 80 bucks you feel guilty about shopping elsewhere). However I'm almost certain S&H fees are a lot larger than profit margins. Since the market is already very competitive they don't have much of a profit margin in the first place.
Also, Amazon loses a hell of a lot on Prime directly, though I'm sure they just view it as subsidizing growth. I'm sure they've lost money on my shipping, at least.
Finally, your zero sum view of the program doesn't really make sense - by increasing the frequency of orders via Amazon, it gives them more power to negotiate better shipping rates, negotiate better bulk rates on products, and expand their distribution network, all of which can benefit both Amazon and me in the form of lower prices than if the program didn't exist, and better service.
I'm skeptical that that is happening (Prime doesn't represent a giant change in volume for them). But let's assume it is, then the benefits should affect all their customers? So non Prime users end up being overcharged?
"Also, Amazon loses a hell of a lot on Prime directly, though I'm sure they just view it as subsidizing growth. I'm sure they've lost money on my shipping, at least."
Maybe you have managed to "beat-the-system", just like people that cycle credit cards end up making off with more money than they give the CC companies - but on average people are being ripped off.
There is no growth to subsidize b/c that only makes sense if they had a mechanism to cash in. If they drop the free shipping then people will stop paying for Prime and will switch to other retailers. Slowly raising the prices to a point where you stop loosing money and then hoping people keep shopping at your website b.c of habit is also a short term strategy.
On a side note, leveraging their size to get preferable shipping rates is also anticompetitive. They aren't a monopoly per se, but they've dominated the market to such an extent that UPS probably can't say no to whatever rates Amazon demands.
They clearly normally overcharge for two day shipping. Just because it says it costs 15 bucks to send the widget, doesn't mean they pay $15 when you ship it with Prime.
Most people that opt for faster shipping and are willing to fork over money are people that need something urgently and are willing to pay extra. Amazon obviously exploits that.
While it's true that they don't seem to care too much about profits, it's naiive to think they have a program where they just throw money away for the sake of an increase in volume. There is no long term way to "cash out" and turn that volume into money. Once you drop the incentives or raise the prices your customers simply leave to the next cheap online retailer.