Amazon Raising Fee for Prime Membership

Posted Thursday, March 20, 2014 in Customer Experience by Ronni Marshak

For those of us who are frequent Amazon.com shoppers, Prime Membership has been a great benefit. For $79 per year, you got free two-day shipping on most purchases (except ones sent directly from third-party partners who aren’t on board with Prime shipping). So many of us use Amazon Prime free shipping that it was a major contributor to the UPS shipping problems last holiday season (see “Recovering from the Crisis of Missed Holiday Deliveries”).

I, personally, love it! I know that I can get my purchases in two days, and I don’t incur additional costs over the price of the items I’ve bought. And, with Amazon now charging sales tax on some items, this savings is even more welcome.

But now Amazon has announced that the Prime Membership fee will be raised to $99 per year. For me, that probably is still a good deal since I do my online shopping on Amazon whenever possible—primarily because of the Prime benefits. Indeed, when searching for products, I usually start by filtering by “eligible for Prime shipping” and only remove that filter if I can’t find what I want from the available items.

CVS_ExtraCare_Savings Note I say that this is probably still a good deal. And that’s because I really don’t know! Unlike CVS, which regularly lets me know exactly how much I’ve saved by using my ExtraCare card and coupons via email (see “How to Offer a Little Extra to Delight Customers”), Amazon doesn’t let you see how much you’ve saved by using Prime shipping. I have recommended that they do so very explicitly. In the “Offer a Little Extra…” article, I stated:

“As an Amazon.com Prime customer, where I spend $79 per year to get free shipping on almost everything and discounts on specific merchandise and services (such as Kindle books and live streaming videos), I have often wished that Amazon provided me with a yearly summary of what I have saved on shipping and on free and discounted stuff I have bought or viewed. For customers who aren’t certain whether to renew their Prime subscription, or those considering whether to buy one for the first time, having this type of breakdown could justify the $79 fee and encourage more sign ups. And, now that Amazon is planning to raise its Prime membership fee by $20/year or more, giving customers “savings statements” would make it much more obvious why Prime is such a good deal even at the higher price.”

In fact, I recommend that Amazon go a step further than CVS and show customers how much they have saved with their Prime Membership on each transaction both in the shopping cart and in the confirmation email. And this information should be included in each Prime customer’s account information available on the “Manage Prime Membership” link under “Your Account.”

Amazon_Prime_Savings
Now that the new price is going in effect, I have a few suggestions for Amazon to take away the sting of the $20 increase and encourage more customers to renew:

  1. Do the math and send along the amount saved over the past year along with the renewal notice. Those customers who have saved more than $99 should renew without a qualm.

  2. Offer a Prime Lite Membership. Those customers who didn’t meet the $99 savings threshold—or even the $79 savings mark—could be offered reduced rather than free shipping for a lower fee.

For example, one of my favorite online clothing etailers, OneStopPlus.com, offers the OSP Shopper’s Club, which offers $2.99 shipping plus free returns for a yearly fee of $19. Amazon could offer $2.99 shipping (or some similar guaranteed amount) for a yearly fee of, say $39. This could generate lots of renewals and entice a whole new category of customers to become Prime Members.

Similarly, there could be another category, say $50 per year, that is free standard shipping, but no free two-day delivery option.

Amazon could easily tailor its Prime offers to different groups of customers based on their buying patterns.

No matter how many tiers of Prime membership Amazon chooses to offer (and they might well decide to stick with one tier for simplicity’s sake), let customers know how much value they are receiving with each transaction and when it comes time to renew.

One_Stop_Plus

Whether Amazon takes all my advice or not, the most important step would be to let those of us who have paid for Prime Membership see how much we have benefited, even if it isn’t by transaction or proactively emailed to us. If you want people to take advantage of a paid service, they have to be able to quantify the value—especially when you are upping the ante.

2 comments


  • feemally2@gmail.com
    feemally Russia on April 7, 2014 at 7:02 a.m.
    This is good service. Sometime problems can raise for short period it will not matter.
  • Patty_author
    Patricia Seybold on April 29, 2014 at 3:08 p.m.
    I LOVE Amazon Prime! I think the new price point is fair.. But I agree with Ronni: It would be easier for me to justify renewing each year if every time I ordered something with Prime, Amazon told me: "You just saved X dollars in shipping costs"  or, "you have saved $xxx so far this year with Amazon Prime."
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