Amazon Prime

From Time:

Even more interesting than the growing Prime ranks is what Prime seems to do to subscribers. A 2010 Businessweek story stated that Amazon Prime broke even within three months of launching, not the two years predicted by its creators. That’s because customers spent as much as 150% more at Amazon after they became Prime members. Subscribers not only ordered more often, but after paying the $79 fee, they started buying things at Amazon that they probably wouldn’t have in the past. Since shipping was always speedy and free, members saved themselves a trip to the store for things like batteries and coffee beans. “In all my years here, I don’t remember anything that has been as successful at getting customers to shop in new product lines,” Robbie Schwietzer, vice president of Amazon Prime, told Businessweek.

The net result of Prime membership — and the thing that has to scare the bejesus out of Amazon’s competition — is that it tends to cause subscribers to stop shopping anywhere else. It’s assumed that Amazon’s prices are competitive. With Prime, shipping costs become a total nonissue. Subscribers automatically defer to shopping at Amazon first because they know shipping is free. And when they spot something they like at another retailer’s site or in a store (yes, it still happens), Prime members are likely to see if Amazon also sells the item. Chances are, Amazon does, the price is about the same or better, and two-day shipping is, of course, thrown in for free.

About Scot McKnight

Scot McKnight is a recognized authority on the New Testament, early Christianity, and the historical Jesus. McKnight, author of more than forty books, is the Professor of New Testament at Northern Seminary in Lombard, IL.

  • http://danieldarling.com Daniel Darling

    Scot, this is totally true. I have had Prime for about a year and I have found that I do this. If something I would buy at the store is the same price, I tend to buy it on Amazon. Even things like office supplies and other things.

  • http://aprilkarli.com AprilK

    I love Prime. No need to go to the store for things when I can just jump on Prime and order it while it’s on my mind. Esp things like vitamins and snacks my kids like. We’re also enjoying the streaming TV shows and movies. Right now my kids are addicted to LOST and my husband and I are enjoying rewatching the series with them.

  • RJS

    A $79 fee means shipping isn’t free (it is $79/year).

    We prefer to not pay fees like this on principle. All of our credit cards are also fee-free.

    We order a fair bit on Amazon and almost never pay shipping (we can plan ahead for the super-saver timing in most cases). In a bad year we pay $25 in shipping … but only once in the last 5 years has it come close to that. So the $79 isn’t worth it. If we watched $79 worth of movies and TV shows streaming it might be worth it … but we don’t.

    The psychology of ordering everything from Amazon is interesting …

  • Phil Miller

    This is totally true for my wife and me. For all sorts of non-food and non-clothing item we buy, Amazon is usually the first place we look. And we live very close to plenty of shopping currently. Having things delivered to our door is just convenient. The other really nice thing is sending gifts. And the streaming is an extra bonus. With the iPad app, I can watch any content from Amazon while working out. I mean, really, I don’t think there’s a better bargain for $6.58 a month.

  • Chris Oakes

    @RJS – I prefer to see the cost as being 22 cents/day. If it saves a few trips to the store per month, I’d say it’s an extremely good deal, especially considering current gas prices (22 cents will barely drive you a mile these days).

  • Kevin Ford

    2 reasons not mentioned previously: Free loans of electronic books, and they are always open. I tend to make my shopping list at 1 am–and I can then check and see if the pricing is good. I do comparison shop, and there are a number of things I have ended up getting somewhere else.

  • LCG

    I have used Amazon Prime since it came out and I’m sure those statistics are pretty accurate. I think it’s a great bargain and if you can buy the same goods for the same price as at a bricks & mortar store why wouldn’t you? Not to mention that you can add four family members who can share the free two day shipping so it’s really less than $20/year plus how long does it take to make up the $20 with $4.00 a gallon gas? I personally think it’s a no-brainer and the movies, etc are just icing on the cake.

  • Joe Canner

    RJS et al., Amazon Prime also entitles users to free streaming of certain movies and TV shows that they would otherwise charge for. It’s sort of like Netflix or Hulu+, although I don’t think they have as much free content. However, when combined with the shipping advantages, it may pay for itself, depending on your shopping and streaming habits.

  • Kenny Johnson

    I’ve been a Prime member for several years. Originally I had a free student account for a year, then they offered to allow me to renew for $40 and I believe I renewed again for another $40. Given that in addition to the “free” 2-day shipping, I also get Kindle rentals and streaming videos (some that Netflix doesn’t carry), I consider Prime a steal.

    We’ve definitely changed our shopping habits. We buy much more from Amazon.

  • Joe Canner

    RJS, sorry I didn’t read your post #3 very carefully; you do refer to TV and movie downloads. Still, I would say that if someone was considering Amazon vs. Netflix vs. Hulu+, one might choose Amazon even if they didn’t do a lot of shopping or streaming, because the combination might pay for itself. Certainly, if you do neither (or very little) it’s probably not worth it. It probably also helps to be disciplined enough not to impulse-buy, but instead only buy stuff that would have bought elsewhere. Not unlike Costco or Sam’s, where the annual fee is mainly to encourage loyalty, but where the lower prices alsoencourage customers to buy more than would normally.

  • Phil Miller

    I actually think Amazon Prime’s free content is better than most of what’s on Netflix’s and Hulu’s. Hulu+ actually still has commercials for most things, and that gets old.

    We don’t have cable, so everything we watch comes through either Amazon Prime or Hulu. We don’t really watch a lot of TV in the first place, though.

  • TJJ

    Prime is a great bargain for me and my family for shipping Christmas presents alone. We do the majority of our Christmas shopping for family all across the country and nevrr have to pack and tape a single box ourselves or get in line at the dreaded post office. The convienience and shipping savings the rest of the year is just icing on the cake as we can do the same for birthdays, etc. Sounds like it is such a good marketing tool for Amazon that they should offer Prime for less, $59 or $49, and get even more customers who only use Amazon.

  • Barb

    Yup–I don’t have to wait until Scot suggests enough books to make shipping free–I can have it now!

  • Wade

    Amazon is awesome for people who live in rural areas and distant from nice shopping areas. I know that may be a few people, but it is by far the best deal that I have on the internet. Also, it is ten times easier to purchase something for someone else, for whatever reason, and have it shipped directly to them. They even had a place on there that encouraged you buying things for your loved ones using your account (possibly forfeiting the membership fee). They realize that it will hook those people in as well. Don’t tell them I said this, but I would pay twice as much per year.

  • Casey Taylor

    I love Prime. AND you can share it with others in your “household.”

    However, Amazon’s prices are NOT as competitive as they have been in the past. I still shop around.

  • Susan

    It’s,also great for shopping for the church kitchen + office – often cheaper than Staples, and i can order from the smartphone the minute i realize we need something, without spending 40 minutes – 1.5 hours of work time running to the store. I love it.

  • Ben Thorp

    I think the thing that is really tempting me is the potential of “loaning” up to 12 ebooks a year for free.

  • Marshall

    Let’s go back to RJS’ most recent post and think about this from a POV larger than my personal convenience. Ordering from Amazon is taking business away from my local community. When my local community is totally bankrupt, then what? Out here in the bushes I have to drive 2 hours each way to buy anything much more complicated than groceries so I’m glad I can mail order especially books, but I would rather hand my money to a neighbor. Of course most of you all don’t have neighbors, just crowds, and getting sucked into this kind of a deal is how that happened. Hey, ask yourself if this is how God wants you to live. Then do something about it.

  • http://dsimmer.com Dean Simmer

    Marshall,

    You bring up a good point. My wife and I break it down like this.

    1. If it can be bought at a locally owned place near our neighborhood, we’ll buy it here.
    2. If “buying local” means CVS, Kroger, Staples, etc. we’ll buy it on Prime.
    The verdict seems to be out on whether or not big box stores headquartered in another state really invest that much money into neighborhoods. There is a closed CVS half a mile from a brand new one, and the “issue” was CVS wanted a newer-looking building so their move helped a domino effect that vacated an entire shopping plaza. Can’t celebrate that kind of “investment” in my communities.
    3. What does “most of you all don’t have neighbors, just crowds, and getting sucked into this kind of a deal is how that happened” mean? That presumes you know a lot about where we all live. I’d give you my stump speech but suffice it to say that is the opposite for my wife and I.

    Amazon does offer many products that I can’t get locally (read: a local retailer) and the value of the streaming content and ebook sharing is enough for us to renew Prime each year. I think of it as $79/year for streaming content which is less than Netflix (although somewhat different content) with free shipping and ebook borrowing to boot.

  • Phil Miller

    I think supporting local businesses is good, but I also think we need to try to evaluate everything holistically. We live on the outer edge of Minneapolis, within driving or walking distance from plenty of shopping. But for some things, it’s more a matter of time-saving than money. There are some good bookstores near me that I do buy from, but there are some things they simply don’t have. I suppose I could special order from them, but than that’s another trip, more gas, etc.

    I guess the somewhat ironic thing about Amazon and other online stores is that because they make it easier to actually shop for things, it actually ends up saving some time in our lives that would otherwise be spent shopping. And, honestly, I have a hard time feeling more virtuous buying something at a local mall or big box retailer compared to buying something from Amazon.

  • metanoia

    There are a couple of things that come to mind in response to this post. First of all, I think our culture suffers from compulsiveness. Do we really need to buy those batteries “now?” After all it’s going to take 2 days to ship it. As mentioned above, what about building a sense of community? We continue to accelerate our cocooning to the point we only communicate using electronic devices. There is something beyond “quaint” of driving to the town center and spending a morning or afternoon talking with the folks who own their own small business, buying an ice cream cone and sitting on a park bench talking with your child or grandchild, supporting local business who get to know you personally and in a pinch may later bend over backwards to keep your business if they feel they may have been guilty of giving you a bit of bad customer service. What about the simple joy of just taking a walk through town for exercise instead of paying gym fees to belong to a club? And finally, is really worth continuing to feed a behemoth that is very actively involved in lobbying politicians on agenda issues that have nothing to do with retail sales?

    I use Amazon, but sparingly. I do comparison shopping and often find that by combining my purchases to take an afternoon to physically go shopping and meet one of my children for coffee or lunch, often outweighs whatever it is I think I may be saving by cloistering myself to a computer.

    I know, it sounds retro, but I see the impersonal has not only crept its way into our culture, but has changed the way we relate to another, and I’m pretty convinced I don’t like it.

  • CharlieO

    If we can buy it within 10% of Amazon’s price locally, we do (not including Walmart). If not, Prime wins. And I can afford more of Scot’s books and recommended reading when they are at Amazon prices, rather than full retail!

  • http://www.psalms4thesinner.blogspot.com/ lawrence

    Also free or paid Amazon Prime members can share their shipping benefits with up to four additional family members living in the same household, or up to four coworkers.


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