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Amazon Pushes Minimum Price Threshold for Free Shipping Up
Posted on February 22, 2016 by Chris Campbell

The Dash Button ordering system. The face of American drone research. One-hour delivery to select markets. Whether it's food-related or not, Amazon serves as a weathervane for today's retail landscape. The company generates a surprising amount of news, and most of the time it's good news (seriously, we cover them nearly weekly in Today in Food and have also written on their exploits fairly often in the blog).

Unfortunately, today, I have some bad news for consumers.

According to TechCrunch, Amazon is raising it's free shipping minimum price threshold for non-Prime members to $49 dollars. The company once held firm on a $25 threshold for free (if slow) shipping on the majority of its products before upping that number to $35 in 2013. As a broke college student, I, like almost everyone else on the planet, took advantage of this offer on everything from textbooks to DVDs to clothes and everything in between. For what it's worth, according to the article, books will retain their $25 threshold.

The move is seen in two lights. The first is a concentrated effort to boost the value of their Prime membership, a $99/year program that offers free two-day shipping on most items. In certain markets, this also translates to one-hour delivery with Prime Now. I wonder how many consumers will look at that $50 minimum and ponder, "That $99 price tag doesn't look so bad now..."

The second (and smaller) light focuses on Amazon's costs. The move may mean that it can cut its shipping cost down a bit and increase its profit margins. Amazon noted in its most recent earnings report that its fulfillment costs were up 32.8% year-over-year. Obviously, part of that expansion is due to an increased membership base for Prime Now, but if the company can convince people to spend more money per order or pay for regular shipping, it won't hurt its bottom line.

It remains to be seen what will happen with Amazon regarding the price increase. The company is known for its ardent following, so my guess is that the move translates to more Prime membership. Although the company may lose a few customers to competitors, my money is with its loyal fans embracing the savings from its Prime program.

Posted in Amazon   Retail  

 

About the Author

Chris Campbell
Business Writer
The Food Institute

Chris focuses on fresh, canned and frozen fruit and fresh and dried vegetables for the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He is a proud Rutgers University alumnus with a degree in English, and has a background in web writing for a variety of industries, including legal, foodservice and small-to-medium sized businesses. In his downtime you can find him watching New York Yankees baseball, hiking, enjoying live music and spending time with his dog Kaiden. He invites you to contact him via email at chris.campbell@foodinstitute.com to talk about anything food-related.

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