Amazon Prime is successful for the same reason Uber or Lyft are: instant gratification relative to alternatives.
My mother, who lives in remote mountains in Japan, is a die-hard Amazon Prime fan. Why? Because it manages to deliver any item to her place across many SKUs. It's more convenient -and often faster- for her to order something on Amazon than to drive 30 minutes to shop at the closest electronics shop. I've been amazed with how good Amazon's logistics is even in rural Japan.
The elusive "aha" moment is actually not that complicated in theory: just provide value faster than alternatives while ensuring quality. In Uber/Lyft's case, it's a safe ride from A to Z arriving in a few minutes. In Amazon Prime's case, it's any merchandise on your doorstep. In AWS's case, it's computing resources at your fingertips in minutes.
The trick with Prime however is, that you pay a 100 bucks a year and then feel the urge to get something back in return - ie faster shipping against non-Prime customers, etc.
On the other hand, it doesn't take long to recoup that $100 worth of free, 2-day shipping, compared to the exorbitant rates that you used to have to pay for similar service from other retailers, or even $8-10 shipping and handling for standard shipping that catalogs used to charge.
Assuming that you would have paid $8-$10 for that level of shipping before. If you're like me, you never would have paid extra for 2-day shipping, but when it's framed in the language of "free", everything changes.
I had two kids in college when we first bought Prime and it paid for itself in one semester due to textbook shipment costs. Buying textbooks via Amazon was often half the price of the local university bookstores (whether affiliated with the campus or not).
Couldn't you have had those books shipped for free anyway, just slower?
The way I buy online, Prime doesn't save me any money. I always go for the free shipping. Without Prime, I wait longer. Prime only saves money if you routinely pay for faster shipping, and do a lot of people really do that?
Amazon is not as cheap as the culture makes it out to be. Most of the time its actually a ripoff compared to other online shopping when you factor in promo codes or deals.
Walmart.com offers free shipping for orders over $45. Target.com offers free shipping also. And if you are ordering dog/cat food or some niche thing, ordering from Chewy.com or computer parts from Newegg, etc.. will net you better prices.
I'm not sure if its Amazon who's canvasing online forums or the myth just continues to get perpetuated by less than savvy shoppers. But Amazon is hardly cheap unless you really do need the 2-day shipping. Which most of the time, people don't mind waiting 3-5 days to save 10-20%.
Disagree, most of the time it's actually the exact same price as any online site. Go comparison shop RAM or harddrives on Amazon and Newegg. Newegg may have a larger selection but all of the major name-brand items are the same price on both sites. If some sponges are $1 cheaper on Walmart.com, who cares. I'm not going to waste 10 minutes comparison shopping for sponges; Amazon is free to make its margins there if it'd like.
Here's an example -- I found a Kingston SSD drive on Newegg that has a Limited Time Offer "See price in cart" gimmick discount. It's $1.10 more expensive on Amazon. I found another Newegg limited time discount Samsung SSD drive that's actually $0.76 cheaper on Amazon. You are not going to be saving 10-20% by waiting 3-5 days.
Juggling logins and shopping carts across a half dozen different websites isn't convenient. Coupon hunting isn't convenient. Amazon Prime is all about convenience and it delivers.
In theory, but they would have ended up with a lot of books they didn't need. My wife taught them that you only buy your textbooks after a few class periods - you never know if the professor will actually use the books they add to the course list and sometimes the list is just plain wrong. There were many instances where a book was on the list but never used - so my kids just never purchased those. You really rely on fast shipping as occasionally the professor will throw you a curve-ball and start referencing a book half-way through a semester.
If you compare Amazon with Prime to Amazon without and don't care about the speed, you only save on shipping if you often order <30 €. So Amazon has that benefit over many other stores even if you do not pay for Prime.
Shipping prices generally are interesting. I get that shipping isn't free, but often enough there really would be potential to optimize. E.g. Amazon ships what they can in small cardboard envelopes (stuff like USB drives, small cables, electronic parts, that kind of thing). Efficient and fast. Other sellers want 4.99 € shipping for that. Which, if I' buying stuff for 15-25 €, is a notable percentage of the price. (And yes, if you send me a big shipping box in which I have to dig through the packaging chips to find the product, then you probably paid close to that for shipping, but that really wasn't necessary)
Or the one that also has stores, where you can either pay 5.99 € shipping or do store pickup. And I'm thinking "eh, the price is a bit cheaper than everywhere else, but they want more shipping. BUT I can easily pick it up myself and maybe even get it a bit quicker.". Change the shipping method, and discover that it now charges me no shipping, but increased the product price by 5.99 €. And which point I ordered somewhere else, didn't go to their (big, probably expensive) store and didn't have a chance to be tempted to buy some additional stuff there.
> (And yes, if you send me a big shipping box in which I have to dig through the packaging chips to find the product, then you probably paid close to that for shipping, but that really wasn't necessary) //
At work I often ship ceramics [in the UK] - none of the couriers will insure it, the reason I'm told is that they all use overhead conveyors and so all parcels have to survive a 2m fall. Perhaps that's part of the reason for "overpacking". Another could be that it's observer bias; occasionally they run out of smaller boxes and so use a large one (necessitating lots of filler) and these occurrences get reported.
Maybe they were A/B testing and you fell into a test group, because I've been using Amazon since very near the beginning and they have always had a free shipping option with no Prime needed. Or I'm going crazy, also a possibility ;-).
> [...] compared to the exorbitant rates [...] $8-10 shipping and handling for standard shipping [...]
So here's the thing: It actually does cost $8-10 to ship most of the types of things you can buy on Amazon. I don't know what Amazon pays for shipping, but I would be surprised if FedEx/UPS/OnTrac will even look at an Amazon box for less than $3-5 (to say nothing of transporting it).
Amazon Prime is predicated on the idea that you'll make Amazon your default retailer after paying for prime.
Being a customer's default retailer is a powerful position for two reasons. First, many customers don't shop around for the lowest price on each item (they shop for lowest basket price), so your margins don't get squeezed quite as much. Second, you don't need to advertise (as much) to these people, so it reduces your marketing spend.
So reverse Costco by mail? (Costco makes all of its money on memberships; margins are fixed at a low rate on all products. The loyalty factor is still there though)
Did you totally not notice that they have a free shipping option where you don't need Prime? You don't need the "fast" service and if you do you can pay for it on a one-time basis, and save money for the rest of the year.
Before Amazon pushed Prime, you routinely had to pay for standard shipping everywhere.
I remember ordering from catalogs in the pre-internet era where you would pay $20 on a $100 order for 2-4 week shipping.
Being able to click a button and have whatever I desire show up on the doorstep within two days for $100/year is the next best thing to a Star Trek replicator.
You don't have to pay $100/year for stuff to show up on your doorstep quickly, compared to the 2-4 weeks you cite.
Compared to your 2-4 week yardstick, the shipping you can get for free is also very quick, usually 2 days, sometimes 4-5 days. And it can be 1 day, which is faster than Prime, if you pay a small (way smaller than $100) $n fee as needed.
In real life, I've never had to pay for 1-day shipping. So that's $n * 0 = $0 that I've paid, all while getting stuff amazingly quickly compared to those pre-Internet catalog orders.
> Before Amazon pushed Prime, you routinely had to pay for standard shipping everywhere.
Totally not true. Amazon had a free shipping option for years before Prime. You just had to select it, and sometimes you had to buy $35 or more, same as it is today.
I never felt that obligation. However, I note that when I don't have Amazon Prime, I abandon a fair number of purchases at the shipping page because the extra shipping cost gives me pause.
Which saves you money on unneeded purchase. Although there's no reason to abandon them, since there are no extra shipping costs if you simply choose the free option that's right there in front of you on the screen (well I can only speak for the US).
That's just the sunk cost fallacy. A lot of us still comparison shop. I buy from other sellers, but Amazon often has better terms (more reliable delivery, for one) and better prices than the other sellers I shop at.
Kind of obvious, but it depends on your personality. Last year I got Prime and bought a grand total of 1 item in the entire year -- mainly because I research most purchases and Amazon is frequently the most expensive place to get something.
Hmm, what are you purchasing that's more expensive than Amazon? Electronics and books are typically roughly the same cost. Household items are generally a little more expensive, but on some occasions it's the same or cheaper.
I agree, but Prime's quality has been slipping a lot for me in the last year. My last few orders from Amazon have been a complete shitshow.
I ordered something on Friday night, got offered free "same day shipping" with "guaranteed delivery on Saturday" because I'm a Prime member and it was over $35, Saturday at 5pm I get an email saying there was a problem with the order and now I'm guaranteed delivery on Sunday, and now I get an email that OnTrac claims my "business" was closed at 11am today. The leasing office here is open from 9am-7pm every day. OnTrac has a 25% success rate for delivering on the correct day for me so far.
Even if the package does arrive tomorrow, I can't get it until Friday now because I'll be at work when the leasing office is open. I should have picked the free two day delivery so I would have gotten a far more reliable carrier like Fedex/UPS to deliver it today. I'm tempted to cancel my Prime membership after having had it since 2009 or so.
It's awesome that it's reliable for your mother up in the mountains, though.
Typically, if they don't meet a guaranteed delivery date, they'll give you a month extension of Prime to make up for it. If you make a few same-day orders during the busy holiday period, you can usually get enough misses to buy you another 6 months or so at least.
As for OnTrac, they usually call me if they can't find me. Have you tried calling their support? Usually they're pretty helpful. The very few times they haven't delivered, the day they were meant to, I've called their helpline and they delivered a second time at ~9PM that same day (while I'm home).
It's funny math if he thinks Amazon is buying him for $100, when he's the one supplying the $100.
And before anyone comes back about how he's getting a savings compared to what he would be paying, he's confused somewhere, because the number he cited was $300, not $100, and that's only because he doesn't opt for the sometimes slower (but usually way faster than promised) free shipping, which is available to all, Prime or not.
I buy a huge amount of stuff on Amazon. No prime needed, no extra Prime fees spent.
What if I need something fast? I'll pay $20 for one-time 1-day shipping, not $100 for a year of 2-day shipping that I don't need. $20 versus $100, in all my years of using Amazon, have never spent the $20 once, so I've saved a few hundred dollars so far.
Lesson here maybe is that pretty charts can obscure the underlying reality, when basic assumptions about who is paying who get flipped.
> It's funny math if he thinks Amazon is buying him for $100, when he's the one supplying the $100.
I think he means they've bought his loyalty. Or the 'prime' factor clouds purchasing decisions in favour of Amazon as the convenience and breadth of products is enough to make them the default choice.
I've been a Prime member for a few years now and I certainly do notice myself thinking Amazon first, anything else second.
The thing I never understood about Prime is that unless you are extremely impatient, prime buys you nothing [1]. I'm not impatient (2 business days vs 5 is rarely a problem), but even if I had paid for 2 day shipping on every Amazon order I made last year, it would have cost less than the cost of a Prime Subscription.
The real insidious thing is what the OP pointed out -- in an attempt to justify their $100 subscription, people end up spending more than they otherwise would.
[1] I'm not counting the Prime Video service/etc, which may have value to people.
I think this misunderstands the value proposition somewhat. Prime changes the convenience calculus of Amazon vs. buying locally. Before I had Prime, I also rarely paid for expedited shipping, but if I had needed something quickly, I'd instead have been more likely to go to the local Best Buy (or Target or whatever) instead. I don't buy from Amazon to justify the subscription, but the fact that I have the subscription now makes Amazon sufficiently convenient that it's the best choice as compared to other options.
It changes the calculus in Amazon's favor, with the benefit accruing to Amazon, and yet, Amazon tricks the customer into paying for this benefit. It's pretty brilliant, but I'm not gullible enough to pay for it when it buys me literally nothing. Faster shipping, when needed, I can already buy, without Prime, and for much less.
I don't see it that way. I'd rather pay $100 a year to avoid going to chains like Best Buy, Target, Bed Bath, Walmart, what have you. Not only are those places inconvenient compared to online shopping but their products are often inferior, overpriced, or both. Frankly 2 day shipping is awesome, $8/month is totally worth the convenience, no tricks involved.
Similarly, does Starbucks trick me when it charges $2.25 for a coffee that I could brew myself for $0.15? Sometimes the convenience is worth it. Amazon Prime makes shopping extremely convenient!
I find it useful being certain that an ordered item is coming on a certain day so that I don't have to worry about missing delivery and dealing with later collecting it. The additional services (Video/Music/Kindle Lending Library) are nice features if you make the most of them, which I do as I use no other media streaming services. I should probably say that I don't pay full price for Amazon Prime but pay the student rate (50%) which I find to be reasonable.
Sounds like a failure of planning. Those thing don't disappear suddenly. (I know, a lot of people suck at this, and it's good for them to have options.)
And if you are incapable of planning, how is Prime going to help you? When you need one of those things, even with Prime you're still going to the store, because you're not going to wait a day or two for TP or printer paper.
I don't get it either. National shipping isn't that expensive to justify paying 100 usd a year, and prime doesn't cover international shipping. So what do you actually get? Fast shipping. Doesn't seem worth it.
I live in a European country without its own Amazon portal, so all my shipping is international. Even if they had free international shipping the next day, prime doesn't seem like a good deal to me. As I only buy a handful of items a year from them. Mostly books.
When I signed for prime 3-4 years ago there was also a lot online retailers jerking around on shipping prices. "Oh that CD is $0.01 but it is $11.99 shipping, so if you don't like it then you'll be refunded the purchase price." Shipping prices in general seemed to be where quite a bit of profit was being made.
I don't know if that is still the case but it was a major reason for me to move to prime back then.
Spending $3000 and saving $300 on delivery is not saving money.
It's spending $3000.
You are $3000 less well off.
This is such a basic concept many will violently oppose the idea with rationale such as "well I was going to spend it anyhow" or "Well, those headphones were on the list" or "These CDs were necessary spends and I would have bought them regardless of the saving".
You have a good point but I think you're reaching too far with it. They're not $3,000 less well off, because the value of the purchases is more than the value of the money. (From the buyer's point of view, which is all that matters here.)
Only true if those purchases would've only been made on amazon prime. The author said he replaced target with amazon prime, so it would make sense his spending on AP shoots up. In reality it's hard to say for sure.
I feel a little guilty every time I buy on Amazon.
I feel good about supporting local businesses in the small town I live in: single Mom who cuts my hair, the couple who run the neighborhood gym, local farmers markets, etc. It is incredibly important to support one's own community and even though people do have jobs supporting Amazon purchases, it does not feel the same to me.
I think the main reason Prime is successful is because it's so convenient. I live in Seattle, and running errands is really time consuming, so it's a lot easier to buy items on Amazon if I don't need them today.
Question: As Amazon continues to refine and optimize its logistics will the delta in delivery time between prime and non-prime remain valued as it is today?
My thought is that the hyper competitive retail marketplace will demand continued optimization in pick-pack-ship and delivery. Amazon will need to add other value to the $100 Prime subscription for it to remain differentiated.
"Recently I bought an item for double the retail price. The seller lied about the price. I wasn't able to leave a review.
"
Return it?
I've bought items >$3000 from third party sellers on amazon, had price or other issues, and returned them, with no problem.
The one time there was an issue, amazon stepped in and took care of it.
"So, am opting for more friction to compensate for less trust.
"
What do you hope to find elsewhere?
In particular, it sounds like you bought from a third party seller on amazon, yet you seem to expect a different experience from those same type of third party sellers elsewhere?
I didn't buy the item. It was an Apple Watch charger that Apple lists for $29 and the vendor has a "list price" $59. In the past, I have read reviews which mention that an item is being sold for a lot more than SRP. So, I thought to do the same. But, I guess that is no longer allowed. So, I can't trust Amazon reviews anymore. This was a week after spending double for something else. So, time to experiment with another vendor.
EDIT (More to your point.)
>> it sounds like you bought from a third party seller on amazon, yet you seem to expect a different experience from those same type of third party sellers elsewhere?
Buying directly from Apple was cheaper than Amazon. Until last week, I would have gone to Amazon first, read the reviews second, and then order. Kinda sad; breaking a decade old habit.
I did price check; didn't order. Seller claimed that an item sold by Apple directly for $29 had a list price of $59. It was touted to be a genuine Apple charger.
That would an interpretation. I didn't order the item in question. However, a week before, I did order a different item for double the price. Different vendor. Different department; one was food, the other electronics. Then I started to look at other reviews for overpriced products. Ok, so I'll leave a negative review. No longer allowed? Seems like a bad combination: no negative reviews on price gouging + really easy purchasing. Caveat Emptor Amazon.
My mother, who lives in remote mountains in Japan, is a die-hard Amazon Prime fan. Why? Because it manages to deliver any item to her place across many SKUs. It's more convenient -and often faster- for her to order something on Amazon than to drive 30 minutes to shop at the closest electronics shop. I've been amazed with how good Amazon's logistics is even in rural Japan.
The elusive "aha" moment is actually not that complicated in theory: just provide value faster than alternatives while ensuring quality. In Uber/Lyft's case, it's a safe ride from A to Z arriving in a few minutes. In Amazon Prime's case, it's any merchandise on your doorstep. In AWS's case, it's computing resources at your fingertips in minutes.
It's easier said than done =)