Classy post by Amazon. Not a lot of marketing fluff about the added value of this price increase (many companies try to spin it). And a link to cancel on the page. It felt like I was being treated like a respected adult customer.
The email they sent to current Prime customers was very classy and effective as well...
Dear ________,
We are writing to provide you advance notice that the price of your Prime membership will be increasing. The annual rate will be $99 when your membership renews on October 29, 2014.
Even as fuel and transportation costs have increased, the price of Prime has remained the same for nine years. Since 2005, the number of items eligible for unlimited free Two-Day Shipping has grown from one million to over 20 million. We also added unlimited access to over 40,000 movies and TV episodes with Prime Instant Video and a selection of over 500,000 books to borrow from the Kindle Owners' Lending Library.
For more information about your Prime membership, visit our Prime membership page.
That's nice here, but in the UK they just upped the price from £49 to £79 along with the introduction of Amazon Instant Video, and that was definitely spun as "look at all this extra content you're getting!" Nevermind if you don't actually intend on using Amazon Instant Video...
I immediately think of Netflix when I read stuff like this --
They are struggling to find a way to raise their prices (or at least create a tiered pricing structure) that doesn't immediately give everyone flashbacks to the Qwikster debacle.
Netflix got, after a few months of hooplah, a pass on that one because there wasn't a lot of competition yet, but I think it's a different story now; or at least becoming one. I run a Netflix blog on the side, and a lot of people comment their intent to cancel their subscription when I write about how certain shows are being removed (King of the Hill caused quite the storm). But I'm fairly certain very few people actually go through with it. $7.99 a month is an afterthought for most, especially compared with alternatives ($50/mo cable subscriptions, competition not being up to par, etc).
All that said, I believe I would pay considerably more for Netflix, or a better streaming service,(I'm guessing upwards of 20-30 bucks a month) if their content library increased alongside the price change. I think many people would likely agree.
Rising prices are common. People understand and deal with it even if they don't necessarily like it. Inflation is a fact of life.
Netflix's problem was twofold. First, they increased prices enormously. A lot of people's rates almost doubled overnight. Second, they presented it as an improvement.
The combination is a real killer. Cost increases are rarely sudden, so people know that a sudden massive price increase is not being done to compensate for increased backend costs, but is instead being done to extract more profit from you. And people really hate being lied to, especially in such an obvious way, where it looks like they think their customers are idiots.
Amazon isn't doing either of these things. This is a pretty small price increase, and they're not presenting it as anything other than an unfortunate effect of rising costs.
I would agree except inflation has not increased 20% since 2005. Many Prime 2-day shipping items cost more than the same items without it. The Prime video library is sub-par to Netflix as well.
That's what I meant, Netflix needs to just rip the bandaid off -- the Qwikster headache being an example of them trying to sugarcoat a price increase as a new service and having the whole thing backfire.
I disagree that most customers will understand, but I think most will grumble for a bit then continue to pay.
I always thought people gave netflix a pass when they increased price because the film/TV industry was basically holding them hostage when they realized how popular netflix was getting. Netflix's contracts were about to expire and when they went to renew the movie/TV guys increased what they were charging to show content so netflix basically passed along the bill. What was nice is that they split up the digital/DVD content in order to keep the price pretty much unchanged for most (most people only did one or the other anyway (I think)).
So basically Netflix's hands were tied and they did the best they could for the customers. Is that right? Or am I misinformed?
Amazon increased the price of Prime a long time ago.
* Once upon a time, 2-day shipping was free and next-day shipping was $3.99. Then they raised the price if the next day happened to be Saturday. Now, next-day shipping varies depending on the item and is often unavailable. It's never less than $3.99, though. 2-day shipping is rarely shipped via a 2-day shipping service; often they drop it in the mail and hope for the best. (Also, why even bother charging me $4? Just make next-day shipping free and charge $4 more for the thing.)
* Various unreliable courier services end up doing a good chunk of the deliveries. UPS, Fedex, and the USPS are great. I don't know how they do it, but they manage to break into my apartment building every day of the week and drop off packages without me ever knowing the details. Lasership and A1? Yeah right. I love it when they try to deliver packages to my office at 10PM. Are any office mail rooms open at 10PM ever? Ever? Nice try. (Does Amazon even use A1 anymore? I remember finding a bug in A1's website that disclosed the name and address of all their customers. Emailed security@amazon and security@a1. Heard back from Amazon that they fixed it. Never saw another package from A1. Maybe A1 just rebranded as Lasership. I really have no idea.)
* Add-on items. Need I say more?
* Every time you order something from Amazon, you get a stupid interstitial about how you can opt-in to receive email about streaming a bunch of B movies and flopped TV shows at 160i resolution via your Flash player. No thanks, Amazon. You're a physical media store, not Netflix! It's cute that you're trying, though.
Finally, while I'm ranting... it's weird that amazon.co.jp and amazon.com don't share my credit card information and address. Would also appreciate Prime for amazon.co.jp, but I know that's never going to happen.
The worst is when you're promised "guaranteed 2-day delivery" while ordering, but it is actually shipped via...
FedEx SmartPost
What is FedEx SmartPost, you may ask? FedEx gets it close to you, then the USPS dicks around with it and there's no tracking info. You might actually get it in 2 days, or it might be a week.
It's like fiber optic broadband -- except the last mile is your package is carried by a turtle riding a sociopathic sloth whose sense of direction is impaired by a cocktail of psychoactive substances.
At some point Amazon should put me on the "Don't use any shipping that goes through the USPS" list.
The USPS is horrible at my house. The whole point of prime was so that I could get away from having anything shipped through USPS, then Amazon started with this SmartPost thing. So every time I order something through prime, if it comes back that it will go through USPS in anyway I email and complain. Every single time they have canceled and re-shipped the item using a shipping company that can actually do 2 day delivery.
> (Also, why even bother charging me $4? Just make next-day shipping free and charge $4 more for the thing.)
Because people are psychologically manipulable idiots. They'll click on the cheapest search result and go buy from the other site that lists it as $4 less. Also, multiple items let you combine shipping.
> Lasership and A1? Yeah right. I love it when they try to deliver packages to my office at 10PM.
Lasership is actually pretty reliable for me, but that's in midtown NYC, probably their most highly serviced area. I find USPS capable of doing the same scheduling idiocy. USPS tried to deliver one package to my office mail room at 6:30 PM for four consecutive days. A week later I finally went to the PO one morning to pick it up, and inexplicably that day they had actually decided to send it out during normal hours. That day there was a pile of 10 packages at the receptionist so I wasn't the only one.
UPS seems to be the most reliable for actual ground delivery, and certainly the best with tracking status when something does go awry. Fedex is about 90%, but occasionally they will do stupid things like fail a delivery if the named person isn't there to sign, and bury it off at some warehouse 10 miles away with instructions for you to go pick it up.
Oh, and as the sibling comment says, Fedex SmartPost is the most hellishly horrible thing to ever happen to internet commerce. I'm convinced Amazon invented it entirely to dick around and make you wish you'd paid for real shipping instead.
>2-day shipping is rarely shipped via a 2-day shipping service;
One thing I find interesting is that UPS Ground can be a guaranteed 2-day service. They call it "day-definite delivery", and it depends on the distance.
With the exception of hybrid shipping, I am consistently impressed by Amazon's ability to ship using the most appropriate service.
Perhaps it is due to my location in an urban area; when I use Amazon 2-day, it arrives in either 1 or 2 days unless shipped using SmartPost in which case it arrives in 5-7 days.
Considering Netflix comes out to $96/yr, $99 for Prime, with a comparable (albeit not quite as good) video library, along with shipping and the free ebook, it's still a deal.
And even if Amazon loses money on a Prime membership, there's been statistics about Prime customers spending over 2x as much annually then non-Prime customers.
We use it at work for buying paper, toner, office supplies, basically anything else that we would be buying from Office Max. It has saved a lot of trips and wasted time.
It took a while for staff to get used to it, now I think there would be a revolt if our prime membership got cancelled. We certainly spend 2x what we used to, it is probably more like 10x
I also use it for my businesses. I am easily willing to pay the premium in Amazon prices and Prime membership to avoid going to stores. It doesn't even make sense if you include time, effort, and the possibility of the item not being in stock.
Doesnt matter for me the deal is still way worth it. I had 3 separate orders this week in my household and one package actually arrived within one day, not even 24 hours. At $99 it is still a deal for the customer if you order often enough.
I was aware that the streaming service came to Prime a few weeks ago, but I had no idea that the Kindle Lending Library even existed! I still believe Prime delivers very good value. I have something arriving from Amazon maybe 3 out of 5 weekdays, and now (probably for a long time, I just didn't know) I don't have to pay for books?
I haven't found the Kindle Lending Library to be very useful. It's a small subset of the books available, mostly ones you wouldn't want to buy, and they do seem to make it very hard to find on a Kindle.
Nope. I got a free trial in late 2005, but realized I didn't buy enough from Amazon to justify the $79 at the time.
Then about six years ago I took a job that was really travel-heavy (gone M-Th every week). My weekends became precious and I didn't want to waste them shopping, so I started using Prime for everything, including the things I'd have otherwise bought at Target or a drugstore, like shampoo. I'd place my order Wednesday morning and it was at my house Friday when I was home.
I've since quit that job and don't travel so much anymore. But between me and my wife, we still get shipments from Amazon probably 2x/ week.
Comprable price to netflix now. It would be nice if, as part of the increase they would make kindle lending library and streaming video sharable with a limited number of house hold members like netflix does or even offer this at a small price increase. We have both but the prime is currently in my name, my wife can share the shipping so it doesn't make sense to get a membership for her just to use the other features though she would like to.
I have to give Amazon credit. I signed up for a trial yesterday and when I saw this I figured I'd have to subscribe at the new price, but that's not the case. In a month, when my trial expires I'm eligible for the old price. My renewal the following year will be for the new price.
Looks like they're handling this really well and respecting their customers!
Prime is considered a marketing expense. Amazon absorbs hundreds of millions or even a billion dollars in shipping charges through prime. It's a huge reason they have a thin profit margin.
That's populist propaganda. Businesses are taxed on profit, not revenue. Even if they were 100% based in the UK, they'd still probably pay very low corporate taxes (if any) due to the thin margin. They actually do pay an enormous amount of tax in the UK in the form of payroll taxes, VAT collections, etc.
It's sad to see people propagate this crap. It's really about veiled protectionism. A big, efficient player comes in and is willing to forego profit indefinitely. Can't tax them legally, so shame them. Tax on 0 is 0. That's how it works for UK companies too. Try reading between the lines...
I mean they don't pay corporation tax, they're based in Luxembourg for that reason. Why should I have to pay a ridiculous amount of money, when they don't pay anything.
They pay corp tax on the profit they earn in their UK's operations. Just like every other company with operations in the UK.
What percentage of your revenue do you pay in corporate taxes? None! You only pay a percentage of profit. (extremely thin for Amazon) They base in Luxembourg to benefit from UK laws and EU regulation. The UK media and government quoting billions in revenue is meaningless. They're trying to stir you up. They would relatively nothing in corp tax relative to their other tax footprint (payroll, vat, etc) and would absolutely spend it all to avoid doing so.
Amazon runs a business in the UK, they are owned by a parent company in Luxembourg that they pay the majority of all their revenue to, thus making almost no profit, thus paying very little in tax.
They run a business in the UK but pay almost nothing in tax, it should be fixed its not fair on small business owners who have to pay all of there tax and get hammered for it.
Can you not see how its a loop hole? It can so easily be fixed.
Revenue sent to a parent company abroad is deducted as an expense? I find that hard to believe.
According to this article[1], what they actually do is send the payments directly to the Luxembourg company, and Amazon UK is just classified as a delivery company. That makes sense, and frankly, it doesn't shock me. I'm from Portugal and I just bought some comics from an US company. Should they start paying Portuguese corporate taxes?
Yeah, the reason AMZN doesn't pay UK tax is NOT because they are not profitable. It is because they legally avoid taxes by basing all their EU operations out of Luxemburg. Tax codes need reform world-wide to avoid this kind of bad behavior.
Etsy also ships physical things, the only difference is that they subcontract to a delivery company, who obviously doesn't pay taxes over Etsy's profits.
But actually, it's not different, because Amazon also subcontracts, the only difference is that the subcontracted delivery company is named... Amazon. So what they're doing is the same as any companies that ships products to the UK, except that they happen to own both companies and they have similar names.
I fail to see the reason why should Amazon UK pay for the profits earned by Amazon Luxembourg, when DHL or whoever don't pay for Etsy's profits that come from the UK.
As SpikeGronim mentioned, they are operating at a very small profit. Investors are starting to get wary about it so they need to do something to increase those numbers.
If it made you buy product you wouldn't normally have bought through amazon then they can still make a profit even if the prime membership does not finance the whole shipping charges.
Spending 10 million on warehouses doesn't reduce their profit by 10 million for that quarter. The point is they do not make money, and people who somehow overlook this by suggesting they are focused on longer term infrastructure investments needs to brush up on accounting (profit vs cash flow). Capital expenditures are not treated as expenses.
Meh. Taking opportunity costs into account, a SINGLE visit to a local retail store that I can bill to a client instead more than covers the yearly expense. Add to that my experience with their customer service and returns (simply stellar[1]) and I would have gladly paid $149/yr which was hinted at previously.
I've saved myself countless hours and shipping charges as a long-time prime member. Watched a whole season of The Americans and five streaming movies for free last week. I'd say I get more than my money's worth...
[1] one more reason to avoid other online retailers or brick and mortars
PS I never buy anything from third party sellers where Amazon doesn't handle the fulfillment. Too many scammers. Yes, I'm looking at you AntOnline on Amazon. Crooks.
"I never buy anything from third party sellers where Amazon doesn't handle the fulfillment."
I've found that Amazon's fulfillment of Marketplace books is seriously subpar, they don't pack them like they pack their own books. By and large I now avoid this one use of Amazon fulfillment---although I made these observations before getting a Prime subscription.
On the other hand, I've found that a 96% or higher satisfaction rating is very strongly correlated with successful third party experience, assuming of course it's based on enough time and transactions (modulo some merchants don't put any padding in their book envelopes and sometimes they get a little damaged). Anything below that is a real gamble.
After some effort, finally trying a packaged version of Windows---a class of things I'd never get except straight from Amazon.com---your hated AntOnline has only a 92% rate.
Over time, due to both per-item shipping fees rising and higher volumes, Amazon's losses on shipping have been rising at an unsustainable rate. The gap last year between its shipping costs and shipping charges was about $3.5 billion, up from just $600 million 5 years ago. http://www.statista.com/statistics/236503/amazons-annual-shi...
Well, that's their explicit shipping charges. Obviously some of the shipping is priced into the product, just like when I buy an Amazon Marketplace book for 1 cent and $3.99 S&H.
Prime only recently (late February iirc) added the streaming stuff in Germany (after they bought the German streaming site "Lovefilm") and increased the prices (you're grandfathered in until early 2015 though iirc). I installed the app on my Xbox and counted...a whopping 81 films/videos were available in English. So basically I get close to 0 extra value from it.
Seems like a coordinated price increase. I use Amazon a lot and think the increase is still reasonable so I won't cancel.
Oh look, I still can't play videos on my non-HAL Linux desktop. No matter, I originally got Prime for the free 2-day shipping, and for me I think it still makes economic sense to keep it. (Besides, their videos are too often low-quality. They won't even let you rent HD versions sometimes, if you're going to watch it on a PC. I have a fiber (albeit non-gigabit :( ) connection, darnit!)
The problem is that delivery is such a long-tail of problems that Amazon will never get on top of it. IMO they're going the right way with their Locker delivery option - sidestepping the whole thing.
I love the service and it provides great value. I'm happy the price has stayed the same for so long but times change, costs go up and I will still pay for it.
So has this gone into effect immediately for new memberships and renewals? My prime expired last month when it was still $79, and I'm considering renewing.
