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Home > Blog > Shipmania!
Out of Our Minds
Wednesday, February 02, 2005 10:47 PM
Shipmania!
Kevin Salwen on Business

How much is shipping worth to you? Amazon is trying to figure out that very question. Under a new program called Amazon Prime, the mega-uber-cyber-store is setting a flat fee for unlimited 2-day shipments. Want one day? That's only a $3.99 premium per shipment.

Great idea. But the price -- $79 a year -- made me gasp. You'd have to order oodles of stuff to make this deal work -- probably at least 10 times a year. How much is the right number? Has Amazon got a winning concept here?


11 comments

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jennifer - 2/8/2005 12:21:00 PM
As a consumer I place these pay-up-front (loyalty) deals in the same category of automatic renewal schemes. Not for me.

At Chapters, (Canada's Barnes and Nobel) a $20.00 loyalty card grants you 10% off every purchase for life. If I purchased one of these cards tomorrow, my payback period would be less than six months, after which I would save at least $20.00 annually. Even with these practically-in-the-bank savings, I cannot bring myself to pay for Chapter's loyalty program out of principal.





Barbara - 2/5/2005 9:09:42 PM
Seth Godin has an interesting take on this subject:

http://sethgodin.typepad.com/seths_blog/2005/02/amazon_and_coff.html
Joan - 2/3/2005 11:43:57 PM
Considering there is either a Borders or a Barnes & Noble near everywhere I work and shop, I feel pretty sure that I can save myself the $79 and have money left over to buy, um, more books.
Ken G. - 2/3/2005 9:02:48 PM
I'm with Mindwalker here. So many site decisions these days seem to be aimed at corporate users and not the consumers they originally targeted. eBay gets more corporate feeling by the minute.

Not saying that's a bad biz strategy; just noting that the online us-vs-them mentality that used to prevail is becoming less and less valid.
Mindwalker - 2/3/2005 11:47:28 AM
But how many times do you just order *one* book?

My typical Amazon buying behavior is to add several books to my wishlist and then once I've crossed the magic $25/no shipping threshhold, go ahead and place the order. It's less of an impulse buy and cheaper, to boot.

Something tells me, however, Amazon Prime isn't aimed at the consumer, anyway.
Alex - 2/3/2005 11:07:04 AM
Amazon's logic:

'Considering that we charge $9.48 for two-day shipping on a single book...many of our customers will find the program very rewarding.'

Agreed.
Laura Bergells - 2/3/2005 10:35:39 AM
How's their competition doing?

I'm thinking about Overstock.com, that touts the $2.95 shipping for everything: buy a couch, bed, or dresser it's $2.95! Buy something small (a book) and you pay book rate.

Granted, it's not two-day shipping, but I usually get most 7-10 ground packages within two days of ordering, anyway (thanks to competition from UPS, FedEx, DHL, and USPS, I imagine).

And if it absolutely, positively has to be there in 1 or 2 days, I can always pop for premium delivery. But $79 up front? I'm not seeing it (but then again, I'm something of a plan-ahead person).

What am I missing?
Wendy - 2/3/2005 9:14:59 AM
The day I read about their operating costs hurting their margins, nice. But, as the consumer advocate I say my brain just went into total 'dissonance mode' and sputtered out! What the hell! I thought you were my neuro-manager and took care of my shipping costs? I thought that's where you were my emotional warrior! When did you become such a whimp? boo hoo... I want my man back!
Dave Taylor - 2/2/2005 11:48:38 PM
My take on this very topic can be read here:

http://www.intuitive.com/blog/amazon_prime_the_inevitable_next_step_when_shipping_is_just_a_business_component.html

with a bit of business analysis sprinkled in for seasoning, of course. :-)

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