9 ms·

Amazon Prime members buy twice as much, don't compare on price

211 points by bproper 15y ago

ryandvm 15y ago
Amazon Prime was a brilliant move. Get people to pay what is probably less then the average user's shipping costs for a year and then they'll refuse to buy products from anyone but you. And now it turns out they'll even go as far as ignoring pricing to quell cognitive dissonance. Nice.
- deleted 15y ago
  [deleted]
- sliverstorm 15y ago
  IMO It's hardly about cognitive dissonance; rather, people don't like to shop around on every damn thing they buy. So, once you position yourself in customer's minds as reliably having competitive pricing (not always the #1 cheapest, but always close) they feel comfortable ordering from you without shopping around.
  - jrockway 15y ago
    I buy Amazon because of the certainty. Item doesn't arrive? "Very sorry, we've overnighted another one." Item is wrong? "Sorry, here's your money back, and keep the item." Item doesn't fit? "Here's a mailing label to send it back." And so on. The consistency of service is why Amazon is good to buy from. You order something and you know you'll have it in 2 days or less.
- ww520 15y ago
  It is a brilliant use of a simple psychology concept - Sunken Cost. People tend to go further to justify the sunken cost. The Prime members become Amazon's captive audiences. Same thing with the Costco/SamsClub members.
  - gwern 15y ago
    Or it could be due to the mental burden of account-keeping and search, and increases in purchases a perfectly rational reaction to lowered costs. (Sunk cost, you say? Believe me, I know about sunk cost, and sunk cost is vastly over-invoked and probably a minimal problem in individual human psychology: http://www.gwern.net/Sunk%20cost http://www.gwern.net/Sunk%20cost )
ShabbyDoo 15y ago
"82% of Prime members buy on Amazon even if the item is less expensive somewhere else" The supposed "source" referenced another study (sans link), so I can't get the answer to the obvious question: Was "less expensive" computed using the marginal cost to the customer of this particular purchase? Meaning, do other sites offer the widget for a few dollars less but charge a lot for 2nd day shipping? I'm a Prime customer, and I've mostly given up on comparison shopping for small items. Amazon's prices are usually good enough that, especially coupled with the free 2nd day shipping, my effective "wage" for comparison is too low to make it worth it. Nevermind the "it just works" feature of Amazon's system (not just website -- the entire process by which a widget comes to my house). My wife and I have forced ourselves to change our shopping behaviors and ask ourselves before thinking about leaving the house, "Do I really need this thing now, or can it wait a day?" $4 for overnight shipping is a bargain compared to wasted time, gas, etc. Stores are harder and harder to justify. That my wife finds ordering a bunch of clothing, trying stuff on at home, and returning what she doesn't want to be much more efficient makes me wonder what the future of retail clothing becomes. She sometimes even regards the "home try-on" process as superior because she can see how a new item of clothing looks with other, previously purchased garments.
- PhrosTT 15y ago
  There's also the money you save but not stepping foot in a store. That is, you don't throw extra items in your cart out of temptation.
  - jrockway 15y ago
    Are you sure about that? Amazon spends a lot of money (and screen space) trying to recommend items for you to buy. I have to imagine that they do that because it works.
    - MBCook 15y ago
      As as Amazon user, it does work. But screen real-estate is quite a bit cheaper than the physical counterpart.
- 15y ago
ShabbyDoo 15y ago
"Amazon spends more than $90 a year for each Prime customer, losing $11 annually for each subscriber." "Losing"? If the other stat of purchase volume increasing from $400 to $900 is true, Amazon is buying volume business for just a 1% discount. I wonder how the profit margins skew between average purchases and those which only happened because a customer had signed-up for prime? I recently ordered some collar stays and had them overnighted for $4. Their cost was $20 for what amounted to some little pieces of stainless steel (exactly what I wanted). The margin on these has to be much better than a DVD player.
- jrockway 15y ago
  Yeah, the article is very poorly written. What they meant to say was that Amazon invests $11 in each customer, and the result is a doubling of purchases. I am sure Amazon makes more than $11 out of every $900 in sales, which makes this a good deal for them.
  - beagle3 15y ago
    The amazon profit margin is something like 3%, which some people consider unsustainable; 3% over the god-knows-how-many billions that flow through them is excellent business. The potential sustainability problem comes from having no margin for error or non-trivial change in structural costs. I don't know enough about it to have an opinion. Regardless, 3% of $400 == $12, so with these numbers, Amazon breaks even on a new $400/year client, and makes money on any client that spends more than that.
    - polshaw 15y ago
      As a point of comparison, Tesco, one of the UK's largest companies, also has a 3% profit margin. They do take £1 in every 7 spent in the UK high street, so it obviously works quite nicely for them. So at volume, it is very sustainable.
ShabbyDoo 15y ago
I have been surprised that Amazon has not vertically integrated into delivery and distribution. Imagine if they had bought DHL. They would have turned what must today be a huge variable cost into a largely fixed one. I don't have time to write about all the interesting innovations in distribution which could result from combining warehousing and delivery. Perhaps fears of antitrust lawsuits and hardball tactics from UPS/FedEx keep Amazon from doing what I consider an obvious next step?
- ChrisLTD 15y ago
  I'd guess that the largest varying factor would be the cost of fuel. Amazon could just hedge on the price of oil and remove the financial uncertainty.
  - ShabbyDoo 15y ago
    Amazon probably either explicitly hedges already or does so implicitly by "purchasing" a forward contract for shipping rates from UPS. The risk of varying fuel costs exists no matter who takes ownership of it.
- Duff 15y ago
  Shipping is a tough business. You need lots of trucks, ramp space at airports, and lose the ability to cherry pick what states you operate in. Consider that despite billions in investments, both DHL before they went away and FedEx Ground today are still not as good as UPS.
  - rdl 15y ago
    FedEx Ground started as a different company (Roadway Package System) -- to this day, it has a lot of contracts, union rules, etc. which make it vastly worse than just a ground version of FedEx. The only FedEx acquisition which seems to be any good is Custom Critical (used for shipping organs, live animals, etc. on next-flight-out commercial service, to get stuff door to door as fast as possible).
    - 15y ago
27182818284 15y ago
Once given Amazon Prime as a gift, I noticed the free shipping started me buying a lot more from Amazon, even if the price ended up slightly more than non-Prime items + their shipping costs. I definitely compare price, but more often than not the difference is so small I convince myself just to go with Amazon Prime versions for like a $1.99 more. Basically it means that for a small dollar or two more I get items quickly.
daeken 15y ago
I've had Prime for almost a year and a half now, and I've spent well into the 5 figures on Amazon as a result. I'm not sure I've always saved money, but the fact that I can get damn near everything in no more than a day has just been great. I've bought desks, chairs, monitors, computers, etc and had them all the next day for $4. There's just no way to beat that, in my mind.
- jm4 15y ago
  I bought a generator from them and got the free 2 day shipping. That thing was like 200lbs. A guy delivered it in an 18-wheeler and had to drive that thing through a little traffic circle in my neighborhood. I felt a little bad about that one. I've spent an obscene amount of money in the 3 years I've had prime. I've definitely saved money on the necessities, but it's easy to one-click the impulse stuff. The subscribe and save stuff is great too. In my opinion, Amazon Prime is the best deal in online shopping. I routinely find items priced lower someplace else online, but the difference is usually less than the cost of shipping. I go out to stores much less than I used to, and when I do I compare everything to Amazon. It's not uncommon for me to purchase several items from my phone and walk out empty handed. It's getting to the point where I mostly only go to stores for food and things that can't wait a day. Sooner or later brick and mortar retailers are going to experience massive fallout from Prime.
  - bostonvaulter2 15y ago
    This effect is even more dramatic in Hawaii because you always get screwed for shipping and things that say free shipping (such as newegg) almost always don't include Hawaii.
  - silverlight 15y ago
    I did the same thing with a 200lb safe o_0. But we have a new baby and have also easily spent in the high 4 figures at least over the last year on baby gear and miscellaneous.
firemanx 15y ago
The thing about the buying on Amazon vs. anywhere else, even if its more expensive: In the vast, vast majority of cases that I've price shopped elsewhere, Amazon is almost always the cheaper option. And if they're more expensive, it's generally by only a dollar or two (also depending on how their pricing algorithm is working that day - I've had times where I've checked in the morning, then come back to buy in the afternoon and there's a whole $5 difference). This leads to the phenomenon of, if you shop on Amazon a fair bit (which Prime's obviously do, but I bet a lot of other "non-Primes" do too), you will probably reach a point where you just quit spending the extra time to price-shop and just buy the thing you're looking for. You end up saving even more that way because you now have more time for other things. All that to say - I think just identifying Prime members with this behavior is a little narrow in focus. My guess is that there are a whole lot of other customers who fit this pattern, but don't have Prime, and I bet there would be some value in pursuing that analysis deeper!
- goostavos 15y ago
  On the subject of the pricing algorithm, one thing that blew me away (and has made me a pretty loyal customer) was purchasing something in the morning, getting an email in the afternoon saying the price had gone down, and finally one last email in the evening informing me that the difference has been refunded to my card. The price change added up to only 1 or 2 dollars, but from a customer service perspective, it was super classy. I'm yet to see any other company do this.
rdl 15y ago
Amazon Prime is wonderful -- I'll price-compare for many purchases (at least as far as googling the name, and if it's a huge purchase, eBay, although eBay is basically useless at this point and has been for several years). It also drives me to buy from Amazon.com LLC vs. Amazon marketplace sellers, or at least to stick to marketplace sellers who themselves offer Prime shipping. The only problem with Amazon Prime is that I sometimes annoy my officemates by ordering lots of random small items (thus, the UPS/FedEx guy ends up coming every day, sometimes multiple times, and covers my desk with small boxes...) Road flares, dish detergent, whipped cream chargers, ... lots of ORM-D stuff. Plus anything electronic or kitchen appliance.
boldt 15y ago
I had an Amazon Mom membership which is basically free Amazon Prime for those who qualify, (think buying baby strollers, etc.) It was a great service and I did buy much more frequently. Recently they downgraded the Amazon Mom perks and as such I now think twice about purchasing from Amazon due to the shipping prices and lag time. Had they not changed their TOS I probably would end up giving them much more of my money in the long run.
gacba 15y ago
The question every entrepreneur should be asking themselves here is, "How can I create the same kind of fervor that Amazon did by introducing Prime?" Amazon generates 130% more business per subscriber just by losing a mere $11/subscriber. Those are numbers that anyone could salivate at.
- onemoreact 15y ago
  Considering $35 comes from acquiring digital video content. Prime was making money until Amazon did that bizarre video play.
  - swalsh 15y ago
    On the other hand, Amazons free digital content was the last point I needed before I decided to purchase a Google TV. For a while I was only consuming the free content, but now i'm about 70/30, where about 70% of what I consume digitally is paid content.
  - dustingetz 15y ago
    > Prime was making money until Amazon did that bizarre video play. they're pretty smart folks, lets speculate what insight this might give us. maybe they think that by bundling video and shipping, they can funnel content consumers from kindle/fire to their product store?
- minouye 15y ago
  ShopRunner has basically productized Prime. $79 annually or $8.95 a month--merchant coverage is mainly across (formerly) GSI Commerce affiliated stores. http://www.shoprunner.com/ http://www.shoprunner.com/
- jilebedev 15y ago
  Thinking about the price/speed tradeoffs, carrier brand images, and whether I'll be at home when this package arrives doesn't make my gut feel good. I still feel good that I've bought something, but shipping is a bit of a bad aftertaste. Prime dissolves that aftertaste and leaves a wonderful "I get to play with it in TWO days!" It's just a focus on user experience. Companies solve genuine problems, and while people pay for solutions, they happily pay more for great shrink wrapping.
thereallurch 15y ago
This is interesting. I am surprised that amazon spends only $55 extra a year on shipping per prime user. This past month alone I've received ~30 packages, all 2 day free shipping from amazon prime. This included some very large objects like a rowing machine, and some small items like a ream of paper. Last year I had a 3'x3'x2' next day aired for 4 dollars in time for Christmas. If I were to try shipping these items the cost would be in the $300-$400 dollar range (for one month). It's easy to think of something I need, hit amazon, select prime eligible, and buy in a matter of 3 clicks...No worry about cost or when it will be at my door. Amazon must have a pretty good deal going with UPS (& FedEx for next day air).
- nknight 15y ago
  You (and I, for that matter, at 17 packages) are outliers. Even amongst Prime members, most people won't get anywhere near 30 packages in a month, ever. The only reason I do is that I don't leave the house much (and hate doing so anyway). Most people would pick up a watch battery on the way home from work -- I go to Amazon and hit "Buy now with 1-Click".
- JunkDNA 15y ago
  Actual shipping costs (not shipping and handling which is what you often get charged by merchants) are pretty inexpensive when operating at the scale Amazon does. My family had a small factory so I got a good sense of what the shipping cost was vs. the handling. It was very inexpensive years ago befor oil prices went up, but I suspect there is still generous slop in the shipping charges for most merchants.
Duff 15y ago
My sister gave me a $25 BestBuy gift card last Christmas. I went to BestBuy, and found that for each of the 3 different things that I needed, I would spend less by buying it on Amazon, even with the gift card. Tax software, for instance, was $49.99 at BestBuy, $16.99 on Amazon.
- gmichnikov 15y ago
  In some stores you can spend your Best Buy gift card on an Amazon gift card.
  - adestefan 15y ago
    Now that most mail in rebates come on some form of pre-paid credit card I'll just use them to buy Amazon gift cards at the local megamart.
  - ja27 15y ago
    I'll have to look for that. My in-laws give me a Best Buy card every year for Christmas and half the time I use it to buy their Christmas gift the next year. Amazon gift cards get spent right away.
    - bostonvaulter2 15y ago
      Also if you ever get a prepaid credit card as a gift you should just spend it on an Amazon gift card. That way you don't need to worry about expiry or going over the credit card's "limit"
ericdykstra 15y ago
Amazon Prime and Amazon "subscribe and save" are two excellent products. I love reducing trips out to crowded stores and time thinking about shopping choices. I don't have to worry about customer service, returning defective products (relatively, way easier on Amazon), etc. I think Jason Calacanis' article about the "Cult of Amazon Prime" hits on a lot of what has made it so successful, and what will make it successful going forward: http://www.launch.is/blog/the-cult-of-amazon-prime.html http://www.launch.is/blog/the-cult-of-amazon-prime.html
- marklabedz 15y ago
  Absolutely agree. Prime has made Amazon my first choice for any one-off item because its that much easier than fighting traffic, other shoppers, and checkout lines. Subscribe and Save is slowly eliminating my need to go to Target for the same reason. Every month, I bought the same things from Target. Now, it "magically" shows up via UPS and I can easily adjust if I notice I'm running short on napkins or have plenty of tissues in the closet. These two models have created a tremendous amount of lock-in. Its a win for Amazon (I buy more) and a win for me (less time/less hassle/almost always less money).
- adestefan 15y ago
  Having a baby and saving ~$10 per box of diapers made me a quick convert to Subscribe and Save. Those things just magically show up on time and save me money in the long run.
- jasonmcalacanis 15y ago
  I've started using the bar coder in the iphone app to snap the bar codes of the things in our house we use regularly and putting them on auto order or buying them in bulk. The $22 hair gel my wife bought was three for $24 at Amazon. I don't have much hair left, so I think those three bottles i just bought will last for two years.... and I never have to search it out again in my life. We did the same thing with bulk bottles of mouth wash, which we now transfer into small desktop size containers. I laugh when the bottle arrive in the mail.... the only issue is what do i do with all these boxes?! We've been giving them to our two year old to paint and build things out of.... seems to work well. :-) ( very kind of you to include a link! )
ssharp 15y ago
I buy a lot of stuff from Amazon without bothering to price compare. This consists mostly of items in the $100 or under range. The reasons are simple: huge selection, "free" 2-day shipping under Prime, and a near-frictionless ordering process -- I don't need to enter my shipping information and credit card information every time I make an order. And with subscriptions, I don't even need to place the order. Prime has completely changed the way I shop for a lot of everyday items and for someone who lives in a rural area and is a 20 minute, 15 mile drive to the nearest Wal Mart, it's really made my life more convenient.
subaruWRX55 15y ago
"$35 comes from acquiring digital video content" The digital content should not be considered in Prime membership cost. People buy into Prime membership for the free shipping, not the digital content. Rather, free digital content is meant to give people's foot into the door of Amazon streaming platform. The digital content is more of a market development cost for the fledgling platform Amazon is creating.
lhnn 15y ago
•Represent 4% of Amazon's customer base •Spend 130% more than regular Amazon customers. (source) •May be responsible for as much as 20% of Amazon's overall sales in the U.S. Eh... those numbers don't line up.
- Lost_BiomedE 15y ago
  It depends how they are calculating the sales numbers. All prime shipments are sold by amazon or through their warehouse holding third party goods. Non-prime sales are likely to have a majority of third party listings not supplied via amazon's warehouse. Also, the "U.S." qualification can skew things a bit.
- dminor 15y ago
  "Sales" might mean individual transactions, in which case the numbers make sense if prime customers place smaller orders on average.
Lost_BiomedE 15y ago
When I shop prime, I usually compare to local price and hassle. Sometimes finding a specific brand or niche product locally will take hours, and sometimes span multiple days to fit my schedule. The items I would have bought on amazon pre-prime, I still compare on price, but these have become the minority of orders for me. My shopping now is the grocery store, dollar store, clearance clothes from big box stores, and amazon. The exception to this is hobby stuff that occurs at shows.
felipemnoa 15y ago
If things keep getting as good as this my gut feeling is that some states will start suing Amazon to get a list of the customers from their state along with all their purchase history. Then they will send a bill to those people for taxes owed along with late charges and interest. I'd be surprised if some states have not even considered this. Does anybody know if it would even be allowed by law?
ben1040 15y ago
Amazon Prime has definitely lowered my "impulse shopping" threshold. One Friday morning last summer, I decided to do some work around the house that weekend, but I didn't have a big enough ladder. A couple clicks later, I have a 22 foot extension ladder being delivered to me on a Saturday. Even with Saturday overnight delivery it was $2 cheaper than Home Depot, and I didn't have to try to figure out how to cram the ladder into my econobox car to bring it home.
- MBCook 15y ago
  I've done that kind of thing a few times. But unless I really want something, I find I still fall into the old habit of "I'm ordering from Amazon, I might as well get a few things to make up for shipping." If I can't find enough things to make it "worthwhile", I often won't buy it. I've been a prime member for years. Shipping is free. But my mind is still usually stuck in the old ways (even if I'm only 28). I have to fight my instinct to tell myself "It's OK to order just one small thing."
  - Lewisham 15y ago
    I find one-click is very helpful for this. Know what you want, find it, one-click, leave.
    - MBCook 15y ago
      That's probably true. I have it turned off because I'm pretty sure I'd end up buying far too much.
  - ben1040 15y ago
    I've been a Prime member for about five or six years, and for a while I shopped there the same way you did (sat down and spent time on a "shopping trip" to pile up the cart to make it "worth it"). The tipping point for me was in early '09 or so when Amazon introduced their iPhone app. At that point if it came to my mind that there was something I needed, I'd just pull out the phone and buy it immediately on Amazon. That changed my habits too when browsing their normal desktop site. From then on, the vast majority of my Amazon purchases have been one-off purchases where I knew what I wanted, spent two or three minutes searching, bought it, and got out. And I do it often; between me and my wife's purchases there's an Amazon box on the front doorstep 2-3 times a week.
philip1209 15y ago
I started buying things like crazy on Prime while living in a dorm without a car. Getting things like shampoo and snacks delivered to my door was incredibly efficient. I still buy most things on Amazon - it's a better deal than driving to Target or even the grocery store sometimes.
EGreg 15y ago
It sounds like Amazon is losing $11 per year on Prime customers, so why do they continue this promotion?
- mbrubeck 15y ago
  "Losing" was the wrong word there. They are spending $11 to acquire $500 of increased business. Even with a 3% profit margin, that's a net gain.
  - EGreg 15y ago
    Where did you see the extra $500 ?
    - mbrubeck 15y ago
      From the very first bullet point, on average Amazon prime members "increase their purchases on Amazon from $400 a year to $900 a year."
FrankGruber5 15y ago
I can definitely attest to buying more for sure. I think price is still important though. But if it comes down to price vs. timely free shipping I may pay more just to get it in 2 days. So I guess it might be right.
tlrobinson 15y ago
I believe it. I always dread buying things on other sites. With Amazon Prime: * Guaranteed to arrive within 2 days. Other sites it not even ship it within 2 days. * Easy to return items in case something goes wrong. * They already have my billing and shipping information, and I trust them to securely store it. * I can see all my orders in one place. Factoring in all of those things, plus the time I don't waste comparison shopping to save a dollar here and there, I'm pretty sure it's the better deal in most cases.
joedev 15y ago
I will only shop on Amazon Prime, and only buy Prime eligible items. Compared to online alternatives: * Even if less elsewhere online I stick with Amazon because the Amazon experience is known and reliable. Compared to a local shop: * Customer reviews are much better, broader, and more in depth than getting input from a local shop owner. * Selection much larger.
graeme 15y ago
I live in Canada. Amazon.com (vs. amazon.ca) and Amazon prime almost make me want to move to America. Amazon.ca is still pretty much just books.
- msg 15y ago
  There are legal reasons: http://en.wikipedia.org/wiki/Amazon.com_controversies#Canadian_site http://en.wikipedia.org/wiki/Amazon.com_controversies#Canadi...
  - graeme 15y ago
    That covers books. But amazon.ca also lacks the non-book products that are so plentiful on amazon.com I had assumed it was for import/distribution reasons, but I'd be interested to find out the real reason. The Canadian site now tends to have all the books the US site has.
    - msg 15y ago
      Sorry for the lameness of this reference, but I think it covers the essential. If Amazon wanted to open a physical business in Canada, it would require Canadian partners that it might not have or want. "The bottom line: If you are a non-Canadian who wants to open a business in Canada, you will have to immigrate to Canada or find one or more Canadians to team up with." http://sbinfocanada.about.com/od/startup/f/Non-Canadians-How-to-Open-a-Business-in-Canada.htm http://sbinfocanada.about.com/od/startup/f/Non-Canadians-How...
      - int3rnaut 15y ago
        Yep, it has to do with Canadian law and the desire to retain a Canadian Cultural identity (thus we protect our Cultural industries). I don't think that applies any more though--or at least since 2010 when Amazon was permitted to open up a local shipping distribution center by essentially buying out our cultural protection laws with a couple tens of million (I think it was 20 mil). Books were the first step, and if you notice other departments have started to be available on our .ca-- I assume it's just a logistics issue before they establish a near identical system. In some ways it's kind of sad, because I do think it will hurt the Canadian arts in the same way Canadian film and television has become second-rate American entertainment-- but the damage is done and with the way things are set up and have been established over the last 20 years, it's inescapable.
tomkarlo 15y ago
"Amazon spends more than $90 a year for each Prime customer, losing $11 annually for each subscriber" Narrow thinking like this is why other retailers don't offer Prime. If you can turn a $400 customer into a $900 customer, you're probably more than covering that "loss" and it should be considered a marketing expense if anything. Put another way, what company wouldn't spend $11 to bring in $500 of customer purchases? The right price point for Prime should be one where the customer benefits by saving on shipping and other costs ("this loss") but Amazon benefits by increasing their overall annual spend -- mostly by moving their spending over from other online and offline merchants. Seems like they're right in that sweet spot.
mckilljoy 15y ago
The last time I moved apartments, I bought something from Amazon for $1 just to make sure my new address was routing correctly.
deleted 15y ago
[deleted]
beagle3 15y ago
I enjoy Amazon Prime very much as a customer; had it for free before, and when the free period ended, I gladly paid the $80 membership because it does save me quite a bit in the end (I buy a lot more at amazon, although I spend less overall -- mostly at the expense of overpriced local stores, somewhat at the expense of other reasonably priced online stores). Recently though, I've started making a habit of converting people to use ShopRunner, and letting everyone I know to get on ShopRunner when the promotion is free. The experience I've had with ShopRunner is not as good as Amazon Prime, but it is close. And I fear the Amazon monoculture more than I enjoy Prime. Don't expect Prime to be as good when they don't actually have to compete on merit. Promote the competition, even if it costs you a little now - it's an investment for the future. (Re: shoprunner, every couple of weeks they used to have a "get in free today" deal; Now it's $1/year once every few weeks. Set up an alert on dealnews.com to be notified the next time this happens)
xbryanx 15y ago
I regularly buy one sub $15 item via Amazon Prime, rather than schelp down to the store. I would have never done this before Prime. Actually Amazon Prime makes not owning a car in a midwest city quite a bit more realistic, for me.
bobbles 15y ago
After living in the UK for six months with Amazon Prime.. its painful to be back in Australia where you can only get fast shipping from certain specific stores. Well not painful, but being able to order something at 10PM and having it arrive at lunchtime at work the next day was such a better shopping experience than I normally get here. I really hope amazon has aspirations of opening an AU store sometime soon.
mehuln 15y ago
Check out the Amazon's revenue growth curve image here: http://static.seekingalpha.com/uploads/2012/1/1128818_13274556445953_1.png http://static.seekingalpha.com/uploads/2012/1/1128818_132745... Now guess when Prime launched. Yes, 2005, the beginning of the hockey stick growth. Prime has been a huge success for Amazon - more like a stroke of genius. Thanks, Mehul
gcb 15y ago
Just like his usability articles, Estimates. Luke has some good stuff out there, but it's all guts. Very little to none formal work.
jwallaceparker 15y ago
Amazon Prime is simply the best deal on the Internet for consumers. I've been a Prime member since its inception and am always amazed at how much time and money I save by not having to leave the house to shop. Books, electronics, cleaning supplies, toothpaste - anything I can get through Amazon, I get through Amazon. Bonus - now the Prime membership includes Amazon Instant Video.
WalterBright 15y ago
Amazon Prime enables me to never leave my basement.
Jem 15y ago
My partner did the Amazon Prime trial last year and forgot to cancel it. He decided instead of contacting Amazon and sorting it out that we'd try it... we did about 95% of our Christmas shopping through Amazon which saved both time and money overall. It more than paid for itself & we plan on renewing this year. (The fact that we can both use the same Prime membership plan rocks my world!) Interesting though - so many of you are talking about 2 day shipping... is that an American thing? Prime in the UK is next day delivery.

211 points by bproper 15y ago

Amazon Prime was a brilliant move. Get people to pay what is probably less then the average user's shipping costs for a year and then they'll refuse to buy products from anyone but you. And now it turns out they'll even go as far as ignoring pricing to quell cognitive dissonance. Nice.

deleted 15y ago
[deleted]
sliverstorm 15y ago
IMO It's hardly about cognitive dissonance; rather, people don't like to shop around on every damn thing they buy. So, once you position yourself in customer's minds as reliably having competitive pricing (not always the #1 cheapest, but always close) they feel comfortable ordering from you without shopping around.
- jrockway 15y ago
  I buy Amazon because of the certainty. Item doesn't arrive? "Very sorry, we've overnighted another one." Item is wrong? "Sorry, here's your money back, and keep the item." Item doesn't fit? "Here's a mailing label to send it back." And so on. The consistency of service is why Amazon is good to buy from. You order something and you know you'll have it in 2 days or less.
ww520 15y ago
It is a brilliant use of a simple psychology concept - Sunken Cost. People tend to go further to justify the sunken cost. The Prime members become Amazon's captive audiences. Same thing with the Costco/SamsClub members.
- gwern 15y ago
  Or it could be due to the mental burden of account-keeping and search, and increases in purchases a perfectly rational reaction to lowered costs. (Sunk cost, you say? Believe me, I know about sunk cost, and sunk cost is vastly over-invoked and probably a minimal problem in individual human psychology: http://www.gwern.net/Sunk%20cost http://www.gwern.net/Sunk%20cost )

ShabbyDoo 15y ago

"82% of Prime members buy on Amazon even if the item is less expensive somewhere else" The supposed "source" referenced another study (sans link), so I can't get the answer to the obvious question: Was "less expensive" computed using the marginal cost to the customer of this particular purchase? Meaning, do other sites offer the widget for a few dollars less but charge a lot for 2nd day shipping? I'm a Prime customer, and I've mostly given up on comparison shopping for small items. Amazon's prices are usually good enough that, especially coupled with the free 2nd day shipping, my effective "wage" for comparison is too low to make it worth it. Nevermind the "it just works" feature of Amazon's system (not just website -- the entire process by which a widget comes to my house). My wife and I have forced ourselves to change our shopping behaviors and ask ourselves before thinking about leaving the house, "Do I really need this thing now, or can it wait a day?" $4 for overnight shipping is a bargain compared to wasted time, gas, etc. Stores are harder and harder to justify. That my wife finds ordering a bunch of clothing, trying stuff on at home, and returning what she doesn't want to be much more efficient makes me wonder what the future of retail clothing becomes. She sometimes even regards the "home try-on" process as superior because she can see how a new item of clothing looks with other, previously purchased garments.

PhrosTT 15y ago
There's also the money you save but not stepping foot in a store. That is, you don't throw extra items in your cart out of temptation.
- jrockway 15y ago
  Are you sure about that? Amazon spends a lot of money (and screen space) trying to recommend items for you to buy. I have to imagine that they do that because it works.
  - MBCook 15y ago
    As as Amazon user, it does work. But screen real-estate is quite a bit cheaper than the physical counterpart.
15y ago

ShabbyDoo 15y ago

"Amazon spends more than $90 a year for each Prime customer, losing $11 annually for each subscriber." "Losing"? If the other stat of purchase volume increasing from $400 to $900 is true, Amazon is buying volume business for just a 1% discount. I wonder how the profit margins skew between average purchases and those which only happened because a customer had signed-up for prime? I recently ordered some collar stays and had them overnighted for $4. Their cost was $20 for what amounted to some little pieces of stainless steel (exactly what I wanted). The margin on these has to be much better than a DVD player.

jrockway 15y ago
Yeah, the article is very poorly written. What they meant to say was that Amazon invests $11 in each customer, and the result is a doubling of purchases. I am sure Amazon makes more than $11 out of every $900 in sales, which makes this a good deal for them.
- beagle3 15y ago
  The amazon profit margin is something like 3%, which some people consider unsustainable; 3% over the god-knows-how-many billions that flow through them is excellent business. The potential sustainability problem comes from having no margin for error or non-trivial change in structural costs. I don't know enough about it to have an opinion. Regardless, 3% of $400 == $12, so with these numbers, Amazon breaks even on a new $400/year client, and makes money on any client that spends more than that.
  - polshaw 15y ago
    As a point of comparison, Tesco, one of the UK's largest companies, also has a 3% profit margin. They do take £1 in every 7 spent in the UK high street, so it obviously works quite nicely for them. So at volume, it is very sustainable.

ShabbyDoo 15y ago

I have been surprised that Amazon has not vertically integrated into delivery and distribution. Imagine if they had bought DHL. They would have turned what must today be a huge variable cost into a largely fixed one. I don't have time to write about all the interesting innovations in distribution which could result from combining warehousing and delivery. Perhaps fears of antitrust lawsuits and hardball tactics from UPS/FedEx keep Amazon from doing what I consider an obvious next step?

ChrisLTD 15y ago
I'd guess that the largest varying factor would be the cost of fuel. Amazon could just hedge on the price of oil and remove the financial uncertainty.
- ShabbyDoo 15y ago
  Amazon probably either explicitly hedges already or does so implicitly by "purchasing" a forward contract for shipping rates from UPS. The risk of varying fuel costs exists no matter who takes ownership of it.
Duff 15y ago
Shipping is a tough business. You need lots of trucks, ramp space at airports, and lose the ability to cherry pick what states you operate in. Consider that despite billions in investments, both DHL before they went away and FedEx Ground today are still not as good as UPS.
- rdl 15y ago
  FedEx Ground started as a different company (Roadway Package System) -- to this day, it has a lot of contracts, union rules, etc. which make it vastly worse than just a ground version of FedEx. The only FedEx acquisition which seems to be any good is Custom Critical (used for shipping organs, live animals, etc. on next-flight-out commercial service, to get stuff door to door as fast as possible).
  - 15y ago

27182818284 15y ago

Once given Amazon Prime as a gift, I noticed the free shipping started me buying a lot more from Amazon, even if the price ended up slightly more than non-Prime items + their shipping costs. I definitely compare price, but more often than not the difference is so small I convince myself just to go with Amazon Prime versions for like a $1.99 more. Basically it means that for a small dollar or two more I get items quickly.

daeken 15y ago

I've had Prime for almost a year and a half now, and I've spent well into the 5 figures on Amazon as a result. I'm not sure I've always saved money, but the fact that I can get damn near everything in no more than a day has just been great. I've bought desks, chairs, monitors, computers, etc and had them all the next day for $4. There's just no way to beat that, in my mind.

jm4 15y ago
I bought a generator from them and got the free 2 day shipping. That thing was like 200lbs. A guy delivered it in an 18-wheeler and had to drive that thing through a little traffic circle in my neighborhood. I felt a little bad about that one. I've spent an obscene amount of money in the 3 years I've had prime. I've definitely saved money on the necessities, but it's easy to one-click the impulse stuff. The subscribe and save stuff is great too. In my opinion, Amazon Prime is the best deal in online shopping. I routinely find items priced lower someplace else online, but the difference is usually less than the cost of shipping. I go out to stores much less than I used to, and when I do I compare everything to Amazon. It's not uncommon for me to purchase several items from my phone and walk out empty handed. It's getting to the point where I mostly only go to stores for food and things that can't wait a day. Sooner or later brick and mortar retailers are going to experience massive fallout from Prime.
- bostonvaulter2 15y ago
  This effect is even more dramatic in Hawaii because you always get screwed for shipping and things that say free shipping (such as newegg) almost always don't include Hawaii.
- silverlight 15y ago
  I did the same thing with a 200lb safe o_0. But we have a new baby and have also easily spent in the high 4 figures at least over the last year on baby gear and miscellaneous.

firemanx 15y ago

The thing about the buying on Amazon vs. anywhere else, even if its more expensive: In the vast, vast majority of cases that I've price shopped elsewhere, Amazon is almost always the cheaper option. And if they're more expensive, it's generally by only a dollar or two (also depending on how their pricing algorithm is working that day - I've had times where I've checked in the morning, then come back to buy in the afternoon and there's a whole $5 difference). This leads to the phenomenon of, if you shop on Amazon a fair bit (which Prime's obviously do, but I bet a lot of other "non-Primes" do too), you will probably reach a point where you just quit spending the extra time to price-shop and just buy the thing you're looking for. You end up saving even more that way because you now have more time for other things. All that to say - I think just identifying Prime members with this behavior is a little narrow in focus. My guess is that there are a whole lot of other customers who fit this pattern, but don't have Prime, and I bet there would be some value in pursuing that analysis deeper!

goostavos 15y ago
On the subject of the pricing algorithm, one thing that blew me away (and has made me a pretty loyal customer) was purchasing something in the morning, getting an email in the afternoon saying the price had gone down, and finally one last email in the evening informing me that the difference has been refunded to my card. The price change added up to only 1 or 2 dollars, but from a customer service perspective, it was super classy. I'm yet to see any other company do this.

rdl 15y ago

Amazon Prime is wonderful -- I'll price-compare for many purchases (at least as far as googling the name, and if it's a huge purchase, eBay, although eBay is basically useless at this point and has been for several years). It also drives me to buy from Amazon.com LLC vs. Amazon marketplace sellers, or at least to stick to marketplace sellers who themselves offer Prime shipping. The only problem with Amazon Prime is that I sometimes annoy my officemates by ordering lots of random small items (thus, the UPS/FedEx guy ends up coming every day, sometimes multiple times, and covers my desk with small boxes...) Road flares, dish detergent, whipped cream chargers, ... lots of ORM-D stuff. Plus anything electronic or kitchen appliance.

boldt 15y ago

I had an Amazon Mom membership which is basically free Amazon Prime for those who qualify, (think buying baby strollers, etc.) It was a great service and I did buy much more frequently. Recently they downgraded the Amazon Mom perks and as such I now think twice about purchasing from Amazon due to the shipping prices and lag time. Had they not changed their TOS I probably would end up giving them much more of my money in the long run.

gacba 15y ago

The question every entrepreneur should be asking themselves here is, "How can I create the same kind of fervor that Amazon did by introducing Prime?" Amazon generates 130% more business per subscriber just by losing a mere $11/subscriber. Those are numbers that anyone could salivate at.

onemoreact 15y ago
Considering $35 comes from acquiring digital video content. Prime was making money until Amazon did that bizarre video play.
- swalsh 15y ago
  On the other hand, Amazons free digital content was the last point I needed before I decided to purchase a Google TV. For a while I was only consuming the free content, but now i'm about 70/30, where about 70% of what I consume digitally is paid content.
- dustingetz 15y ago
  > Prime was making money until Amazon did that bizarre video play. they're pretty smart folks, lets speculate what insight this might give us. maybe they think that by bundling video and shipping, they can funnel content consumers from kindle/fire to their product store?
minouye 15y ago
ShopRunner has basically productized Prime. $79 annually or $8.95 a month--merchant coverage is mainly across (formerly) GSI Commerce affiliated stores. http://www.shoprunner.com/ http://www.shoprunner.com/
jilebedev 15y ago
Thinking about the price/speed tradeoffs, carrier brand images, and whether I'll be at home when this package arrives doesn't make my gut feel good. I still feel good that I've bought something, but shipping is a bit of a bad aftertaste. Prime dissolves that aftertaste and leaves a wonderful "I get to play with it in TWO days!" It's just a focus on user experience. Companies solve genuine problems, and while people pay for solutions, they happily pay more for great shrink wrapping.

thereallurch 15y ago

This is interesting. I am surprised that amazon spends only $55 extra a year on shipping per prime user. This past month alone I've received ~30 packages, all 2 day free shipping from amazon prime. This included some very large objects like a rowing machine, and some small items like a ream of paper. Last year I had a 3'x3'x2' next day aired for 4 dollars in time for Christmas. If I were to try shipping these items the cost would be in the $300-$400 dollar range (for one month). It's easy to think of something I need, hit amazon, select prime eligible, and buy in a matter of 3 clicks...No worry about cost or when it will be at my door. Amazon must have a pretty good deal going with UPS (& FedEx for next day air).

nknight 15y ago
You (and I, for that matter, at 17 packages) are outliers. Even amongst Prime members, most people won't get anywhere near 30 packages in a month, ever. The only reason I do is that I don't leave the house much (and hate doing so anyway). Most people would pick up a watch battery on the way home from work -- I go to Amazon and hit "Buy now with 1-Click".
JunkDNA 15y ago
Actual shipping costs (not shipping and handling which is what you often get charged by merchants) are pretty inexpensive when operating at the scale Amazon does. My family had a small factory so I got a good sense of what the shipping cost was vs. the handling. It was very inexpensive years ago befor oil prices went up, but I suspect there is still generous slop in the shipping charges for most merchants.

Duff 15y ago

My sister gave me a $25 BestBuy gift card last Christmas. I went to BestBuy, and found that for each of the 3 different things that I needed, I would spend less by buying it on Amazon, even with the gift card. Tax software, for instance, was $49.99 at BestBuy, $16.99 on Amazon.

gmichnikov 15y ago
In some stores you can spend your Best Buy gift card on an Amazon gift card.
- adestefan 15y ago
  Now that most mail in rebates come on some form of pre-paid credit card I'll just use them to buy Amazon gift cards at the local megamart.
- ja27 15y ago
  I'll have to look for that. My in-laws give me a Best Buy card every year for Christmas and half the time I use it to buy their Christmas gift the next year. Amazon gift cards get spent right away.
  - bostonvaulter2 15y ago
    Also if you ever get a prepaid credit card as a gift you should just spend it on an Amazon gift card. That way you don't need to worry about expiry or going over the credit card's "limit"

ericdykstra 15y ago

Amazon Prime and Amazon "subscribe and save" are two excellent products. I love reducing trips out to crowded stores and time thinking about shopping choices. I don't have to worry about customer service, returning defective products (relatively, way easier on Amazon), etc. I think Jason Calacanis' article about the "Cult of Amazon Prime" hits on a lot of what has made it so successful, and what will make it successful going forward: http://www.launch.is/blog/the-cult-of-amazon-prime.html http://www.launch.is/blog/the-cult-of-amazon-prime.html

marklabedz 15y ago
Absolutely agree. Prime has made Amazon my first choice for any one-off item because its that much easier than fighting traffic, other shoppers, and checkout lines. Subscribe and Save is slowly eliminating my need to go to Target for the same reason. Every month, I bought the same things from Target. Now, it "magically" shows up via UPS and I can easily adjust if I notice I'm running short on napkins or have plenty of tissues in the closet. These two models have created a tremendous amount of lock-in. Its a win for Amazon (I buy more) and a win for me (less time/less hassle/almost always less money).
adestefan 15y ago
Having a baby and saving ~$10 per box of diapers made me a quick convert to Subscribe and Save. Those things just magically show up on time and save me money in the long run.
jasonmcalacanis 15y ago
I've started using the bar coder in the iphone app to snap the bar codes of the things in our house we use regularly and putting them on auto order or buying them in bulk. The $22 hair gel my wife bought was three for $24 at Amazon. I don't have much hair left, so I think those three bottles i just bought will last for two years.... and I never have to search it out again in my life. We did the same thing with bulk bottles of mouth wash, which we now transfer into small desktop size containers. I laugh when the bottle arrive in the mail.... the only issue is what do i do with all these boxes?! We've been giving them to our two year old to paint and build things out of.... seems to work well. :-) ( very kind of you to include a link! )

ssharp 15y ago

I buy a lot of stuff from Amazon without bothering to price compare. This consists mostly of items in the $100 or under range. The reasons are simple: huge selection, "free" 2-day shipping under Prime, and a near-frictionless ordering process -- I don't need to enter my shipping information and credit card information every time I make an order. And with subscriptions, I don't even need to place the order. Prime has completely changed the way I shop for a lot of everyday items and for someone who lives in a rural area and is a 20 minute, 15 mile drive to the nearest Wal Mart, it's really made my life more convenient.

subaruWRX55 15y ago

"$35 comes from acquiring digital video content" The digital content should not be considered in Prime membership cost. People buy into Prime membership for the free shipping, not the digital content. Rather, free digital content is meant to give people's foot into the door of Amazon streaming platform. The digital content is more of a market development cost for the fledgling platform Amazon is creating.

lhnn 15y ago

•Represent 4% of Amazon's customer base •Spend 130% more than regular Amazon customers. (source) •May be responsible for as much as 20% of Amazon's overall sales in the U.S. Eh... those numbers don't line up.

Lost_BiomedE 15y ago
It depends how they are calculating the sales numbers. All prime shipments are sold by amazon or through their warehouse holding third party goods. Non-prime sales are likely to have a majority of third party listings not supplied via amazon's warehouse. Also, the "U.S." qualification can skew things a bit.
dminor 15y ago
"Sales" might mean individual transactions, in which case the numbers make sense if prime customers place smaller orders on average.

Lost_BiomedE 15y ago

When I shop prime, I usually compare to local price and hassle. Sometimes finding a specific brand or niche product locally will take hours, and sometimes span multiple days to fit my schedule. The items I would have bought on amazon pre-prime, I still compare on price, but these have become the minority of orders for me. My shopping now is the grocery store, dollar store, clearance clothes from big box stores, and amazon. The exception to this is hobby stuff that occurs at shows.

felipemnoa 15y ago

If things keep getting as good as this my gut feeling is that some states will start suing Amazon to get a list of the customers from their state along with all their purchase history. Then they will send a bill to those people for taxes owed along with late charges and interest. I'd be surprised if some states have not even considered this. Does anybody know if it would even be allowed by law?

ben1040 15y ago

Amazon Prime has definitely lowered my "impulse shopping" threshold. One Friday morning last summer, I decided to do some work around the house that weekend, but I didn't have a big enough ladder. A couple clicks later, I have a 22 foot extension ladder being delivered to me on a Saturday. Even with Saturday overnight delivery it was $2 cheaper than Home Depot, and I didn't have to try to figure out how to cram the ladder into my econobox car to bring it home.

MBCook 15y ago
I've done that kind of thing a few times. But unless I really want something, I find I still fall into the old habit of "I'm ordering from Amazon, I might as well get a few things to make up for shipping." If I can't find enough things to make it "worthwhile", I often won't buy it. I've been a prime member for years. Shipping is free. But my mind is still usually stuck in the old ways (even if I'm only 28). I have to fight my instinct to tell myself "It's OK to order just one small thing."
- Lewisham 15y ago
  I find one-click is very helpful for this. Know what you want, find it, one-click, leave.
  - MBCook 15y ago
    That's probably true. I have it turned off because I'm pretty sure I'd end up buying far too much.
- ben1040 15y ago
  I've been a Prime member for about five or six years, and for a while I shopped there the same way you did (sat down and spent time on a "shopping trip" to pile up the cart to make it "worth it"). The tipping point for me was in early '09 or so when Amazon introduced their iPhone app. At that point if it came to my mind that there was something I needed, I'd just pull out the phone and buy it immediately on Amazon. That changed my habits too when browsing their normal desktop site. From then on, the vast majority of my Amazon purchases have been one-off purchases where I knew what I wanted, spent two or three minutes searching, bought it, and got out. And I do it often; between me and my wife's purchases there's an Amazon box on the front doorstep 2-3 times a week.

philip1209 15y ago

I started buying things like crazy on Prime while living in a dorm without a car. Getting things like shampoo and snacks delivered to my door was incredibly efficient. I still buy most things on Amazon - it's a better deal than driving to Target or even the grocery store sometimes.

EGreg 15y ago

It sounds like Amazon is losing $11 per year on Prime customers, so why do they continue this promotion?

mbrubeck 15y ago
"Losing" was the wrong word there. They are spending $11 to acquire $500 of increased business. Even with a 3% profit margin, that's a net gain.
- EGreg 15y ago
  Where did you see the extra $500 ?
  - mbrubeck 15y ago
    From the very first bullet point, on average Amazon prime members "increase their purchases on Amazon from $400 a year to $900 a year."

FrankGruber5 15y ago

I can definitely attest to buying more for sure. I think price is still important though. But if it comes down to price vs. timely free shipping I may pay more just to get it in 2 days. So I guess it might be right.

tlrobinson 15y ago

I believe it. I always dread buying things on other sites. With Amazon Prime: * Guaranteed to arrive within 2 days. Other sites it not even ship it within 2 days. * Easy to return items in case something goes wrong. * They already have my billing and shipping information, and I trust them to securely store it. * I can see all my orders in one place. Factoring in all of those things, plus the time I don't waste comparison shopping to save a dollar here and there, I'm pretty sure it's the better deal in most cases.

joedev 15y ago

I will only shop on Amazon Prime, and only buy Prime eligible items. Compared to online alternatives: * Even if less elsewhere online I stick with Amazon because the Amazon experience is known and reliable. Compared to a local shop: * Customer reviews are much better, broader, and more in depth than getting input from a local shop owner. * Selection much larger.

graeme 15y ago

I live in Canada. Amazon.com (vs. amazon.ca) and Amazon prime almost make me want to move to America. Amazon.ca is still pretty much just books.

msg 15y ago
There are legal reasons: http://en.wikipedia.org/wiki/Amazon.com_controversies#Canadian_site http://en.wikipedia.org/wiki/Amazon.com_controversies#Canadi...
- graeme 15y ago
  That covers books. But amazon.ca also lacks the non-book products that are so plentiful on amazon.com I had assumed it was for import/distribution reasons, but I'd be interested to find out the real reason. The Canadian site now tends to have all the books the US site has.
  - msg 15y ago
    Sorry for the lameness of this reference, but I think it covers the essential. If Amazon wanted to open a physical business in Canada, it would require Canadian partners that it might not have or want. "The bottom line: If you are a non-Canadian who wants to open a business in Canada, you will have to immigrate to Canada or find one or more Canadians to team up with." http://sbinfocanada.about.com/od/startup/f/Non-Canadians-How-to-Open-a-Business-in-Canada.htm http://sbinfocanada.about.com/od/startup/f/Non-Canadians-How...
    - int3rnaut 15y ago
      Yep, it has to do with Canadian law and the desire to retain a Canadian Cultural identity (thus we protect our Cultural industries). I don't think that applies any more though--or at least since 2010 when Amazon was permitted to open up a local shipping distribution center by essentially buying out our cultural protection laws with a couple tens of million (I think it was 20 mil). Books were the first step, and if you notice other departments have started to be available on our .ca-- I assume it's just a logistics issue before they establish a near identical system. In some ways it's kind of sad, because I do think it will hurt the Canadian arts in the same way Canadian film and television has become second-rate American entertainment-- but the damage is done and with the way things are set up and have been established over the last 20 years, it's inescapable.

tomkarlo 15y ago

"Amazon spends more than $90 a year for each Prime customer, losing $11 annually for each subscriber" Narrow thinking like this is why other retailers don't offer Prime. If you can turn a $400 customer into a $900 customer, you're probably more than covering that "loss" and it should be considered a marketing expense if anything. Put another way, what company wouldn't spend $11 to bring in $500 of customer purchases? The right price point for Prime should be one where the customer benefits by saving on shipping and other costs ("this loss") but Amazon benefits by increasing their overall annual spend -- mostly by moving their spending over from other online and offline merchants. Seems like they're right in that sweet spot.

mckilljoy 15y ago

The last time I moved apartments, I bought something from Amazon for $1 just to make sure my new address was routing correctly.

deleted 15y ago

[deleted]

beagle3 15y ago

I enjoy Amazon Prime very much as a customer; had it for free before, and when the free period ended, I gladly paid the $80 membership because it does save me quite a bit in the end (I buy a lot more at amazon, although I spend less overall -- mostly at the expense of overpriced local stores, somewhat at the expense of other reasonably priced online stores). Recently though, I've started making a habit of converting people to use ShopRunner, and letting everyone I know to get on ShopRunner when the promotion is free. The experience I've had with ShopRunner is not as good as Amazon Prime, but it is close. And I fear the Amazon monoculture more than I enjoy Prime. Don't expect Prime to be as good when they don't actually have to compete on merit. Promote the competition, even if it costs you a little now - it's an investment for the future. (Re: shoprunner, every couple of weeks they used to have a "get in free today" deal; Now it's $1/year once every few weeks. Set up an alert on dealnews.com to be notified the next time this happens)

xbryanx 15y ago

I regularly buy one sub $15 item via Amazon Prime, rather than schelp down to the store. I would have never done this before Prime. Actually Amazon Prime makes not owning a car in a midwest city quite a bit more realistic, for me.

bobbles 15y ago

After living in the UK for six months with Amazon Prime.. its painful to be back in Australia where you can only get fast shipping from certain specific stores. Well not painful, but being able to order something at 10PM and having it arrive at lunchtime at work the next day was such a better shopping experience than I normally get here. I really hope amazon has aspirations of opening an AU store sometime soon.

mehuln 15y ago

Check out the Amazon's revenue growth curve image here: http://static.seekingalpha.com/uploads/2012/1/1128818_13274556445953_1.png http://static.seekingalpha.com/uploads/2012/1/1128818_132745... Now guess when Prime launched. Yes, 2005, the beginning of the hockey stick growth. Prime has been a huge success for Amazon - more like a stroke of genius. Thanks, Mehul

gcb 15y ago

Just like his usability articles, Estimates. Luke has some good stuff out there, but it's all guts. Very little to none formal work.

jwallaceparker 15y ago

Amazon Prime is simply the best deal on the Internet for consumers. I've been a Prime member since its inception and am always amazed at how much time and money I save by not having to leave the house to shop. Books, electronics, cleaning supplies, toothpaste - anything I can get through Amazon, I get through Amazon. Bonus - now the Prime membership includes Amazon Instant Video.

WalterBright 15y ago

Amazon Prime enables me to never leave my basement.

Jem 15y ago

My partner did the Amazon Prime trial last year and forgot to cancel it. He decided instead of contacting Amazon and sorting it out that we'd try it... we did about 95% of our Christmas shopping through Amazon which saved both time and money overall. It more than paid for itself & we plan on renewing this year. (The fact that we can both use the same Prime membership plan rocks my world!) Interesting though - so many of you are talking about 2 day shipping... is that an American thing? Prime in the UK is next day delivery.