Amazon.com recently announced changes to their Free Super Saver Shipping program. First, the minimum order size for “free shipping” has increased to $35 from $25. Second, it is officially getting slower:
With free shipping, your order will be delivered 5-8 business days after all of your items are available to ship, including pre-order items.
So not only will it take up to 2 weeks to get your stuff, that is only after every single thing is ready to ship. I’ve already noticed their “Free Super Saver Shipping” getting slower and slower. “ParcelPool” seems to be code for “let it sit around until you absolutely have nothing else to do.” Personally, I’m okay with a $35 minimum. But the slower shipping is why I don’t shop at Amazon as much anymore.
Various media outlets have their theories on why this happened – higher shipping costs? Amazon about to record huge losses? Shareholder revolt? My interpretation: The loss-leader party is starting to wind down.
Up until now, Amazon has taken a “loss leader” approach to building up their business. Their margins are razor-thin… In 2012, they sold over $60 billion dollars of stuff yet still lost money. Why?
- To crush the competition. Is there any direct competitor to Amazon? Buy.com? Ha. There are some tech places like Monoprice and Newegg that have a loyal following. eBay is cheap but inconsistent. So we’re left with the brick and mortars – Walmart, Target, and Costco.
- To change your shopping habits. They also need to promote a huge behavioral change where when you need something you don’t think Walmart or Costco, you think let’s go on Amazon and just click and buy. It takes lots of repetition to gain that kind of trust and habit formation. Low prices and fast, free shipping will do that.
During this time, consumers like myself have been happily buying things cheaper from Amazon than anywhere else, from laundry detergent to diapers to hard drives. Why waste the time and gas going anywhere else? I’m afraid they are almost done giving out the free drugs. Are we addicted enough to finally allow them to make big profits?
It seems like they are switching to the Costco model. They want your $79 Prime membership fee, and then they hope to break even on everything else by giving you a nice solid low price along with free 2-day shipping. (Free 3-month trial with Amazon Mom, Free 6-month trial with Amazon Student)