Amazon.com Inc. is growing the minimum order size free of charge shipping to US$49 from US$35, one step that could encourage more consumers to subscribe to Prime, the online retailer’s annual service which includes two-day deliveries.
The advantage of getting good individuals to sign up for Prime services -for US$99 a year – is they tend to shop more often and spend more money, while access to other perks such as online movies, music and other content keeps customers within Amazon’s shopping ecosystem.
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By encouraging non-Prime customers to spend more on one order, Seattle-based Amazon is also planning to reduce costs while boosting profits on each sale. The new threshold follows a 33 per cent begin fulfillment costs – warehousing, packaging and shipping – in the fourth quarter, which outpaced a 15 per cent increase in revenue. Monday’s price increase is the first since 2013, when Amazon raised the threshold to US$35 from US$25.
Amazon’s new minimum order size free of charge shipping brings it in line with Wal-Mart Stores Inc.’s online store, with a threshold of US$50, or free pickup in stores. Target Corp. includes a US$25 minimum, while it’s US$35 at startup Jet.com Inc.
As Amazon expands overseas and seeks methods to reduce the cost of fulfilling orders, it may be preparing to launch a global shipping and logistics operation which will contend with United Parcel Service Inc. and FedEx Corp.
Bloomberg News
