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Amazon touts Prime as it raises free shipping threshold

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Amazon touts Prime as it raises free shipping threshold
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Amazon announced that it is raising the minimum purchase amount per order to $35 in order to receive free shipping. Some analysts cite the rising cost of shipping, while others contend that Amazon is flexing its muscles as a market leader, imposing a form of price premium on its customers.

The announcement on the Amazon web site reads almost like an advertisement for Amazon Prime. And why not? Our research shows that Prime members spend almost 5X the amount annually than non-members and that once hooked, over 90% of members renew in subsequent years.

Raising the minimum purchase to earn free shipping will encourage more customers to consider joining Prime. Amazon reported in the past that every 1% of new Prime members equates to a 1.5% bump in revenues, and with penetration of Prime still at less than 10% of its customer base, there is lots of room for growth.

 

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