For those who do a lot of shopping on Amazon, there's big news afoot. One of the biggest draws the company had was to offer up free shipping on its products with a certain minimal purchase, valued at $25 and up. But now, the company is boosting the minimum order required to $35, and the reasons behind the change may prove very surprising.
For its part, Amazon is keeping mum on just why it's bumped up the value required to gain access to free shipping from $25 to $35. This is an especially unusual move considering that the holiday shopping season is about to kick up in earnest within the next couple weeks or so, though for some it's already in full swing. Amazon did note, however, that this is the first time that it's bumped up the pricing to get in on the “Free Super Saver Shipping” option in over 10 years, so it may well be that costs just caught up with Amazon. After all, the average price of a gallon of gas in 2003 was around $1.72 a gallon, and today, it's much, much more. Issues of inflation in general also play a role here; the value of a dollar has fallen somewhat since 2003.
Of course, that's not the only potential issue involved. Raising the prices on free shipping could have been done as a way to better narrow the value gap in terms of Amazon's Amazon Prime product, which provides not only free shipping on all orders, but also access to a wide array of streaming video options and other services. If orders suddenly have to be almost 50 percent larger to get in on the free shipping, it may well cause some to think about getting Amazon Prime who wouldn't have had the impetus to do so otherwise. Again, with the holiday shopping season in full tilt, this may well be the necessary nudge some needed to get into Amazon Prime.
Of course, it's also possible that budget-minded folks will simply delay Amazon purchases until the $35 point is reached. It's surprisingly easy to spend $10 on Amazon—a paperback book or two will do the job, usually—so for some, it may be enough to just hold the line on upcoming purchases. Others, meanwhile, will likely reconsider the stance on Amazon Prime, and see that the extra streaming value—Amazon has a list of 14,890 movies available on its “Prime Eligible” list of Amazon Instant Video options—is worth spending the annual fee.
This is a move that's likely to have mixed results for Amazon. There will almost certainly be some to reconsider the value proposition inherent in Amazon's shipping policy here and make the move to Prime as a result. There will also be those who will simply delay purchases, and that's likely to mean some losses to Amazon as well. But even assuming a 50 / 50 split of delayers versus upgraders—which isn't a bad number for planning purposes—that's still likely to be a net gain for Amazon, in the end.
Regardless of the motivation behind it, the point still remains: it's going to cost a bit more, one way or the other, to get free shipping out of Amazon, so whether the response is to compile orders for an all at once shipment or consider going with Amazon Prime, the end result is the same. Something will need to change in the near-term in response.
Edited by Stefania Viscusi
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