Amazon's Prime program is where you can get unlimited 2-day shipping on Amazon products (as opposed to products sold by Amazon merchants) by paying a yearly fee of $79. They recently offered me a one-month free trial and I have already made 3 - 4 purchase over the past couple of weeks. Granted, I have a lot of travel coming up (about which more later) for which I'm stocking up on things but there's no denying the lure of Prime! Prime essentially makes the transaction costs feel free. Yes, Amazon has Super-Saver shipping but that can take up to a week and you need to buy at least $25 worth of goods. With Prime, the 2-day shipping shortens the gratification window and so I've been using it not just to make less commonplace purchases like a new digital camera, but also sundry items like razor blades.
Prime was introduced in '05 and investors hammered Amazon for it but the Company claims Prime is behind their latest revenue increases, which have boosted the share price. I believe it. It's happened to me.
Interestingly, Zappos is a big believer in free, overnight shipping and credits this with a lot of their success. I read an article (forgetting which magazine), in which their CEO mentioned that they invest in free shipping and customer service (as opposed to advertising).
I'd say with Zappos, they couldn't exist without the free shipping and returns. For me, purchasing clothing online involves real guess-work. You see the picture but there's nothing like holding it and trying it on. The free shipping policy is what allows the customer to get over that hurdle. That's why I've purchased a couple pairs of shoes from them and hardly purchased clothes online from anywhere else.
The Amazon Prime offer reminds me of the challenges faced by Kozmo.com and UrbanFetch. As I understand it, a real problem for them initially was the fact that people would purchase small things like razor blades alone. No shipping cost allowed for whimsical purchase but at the same time, the customer wasn't compelled to bucket groups of purchases and so the cost of having a messenger deliver something as small as some razors or worse, some thing cheaper, ate into their margins. For this reason, eventually they implemented delivery minimums. Amazon charges for the Prime service but I'd be curious if it's structured in such a fashion to prevent that situation.
Me, I used my Prime trial rigorously but never purchased it. If it were free, I'd make a lot more purchases. I can't commit to that fee.
Posted by: Saadiq Rodgers-King | August 24, 2007 at 02:27 PM