by LawInc Staff
March 16, 2014
Amazon.com, Inc., a Delaware Corporation, the leader of online retail announced today that it is increasing its annual Amazon Prime membership by 25% from $79 to $99. Amazon Prime is a two-day shipping service available to members with an annual membership fee.
Amazon delivers unlimited orders in two-days to Prime members for free! That is a great alternative to the standard shipping fees. In addition, Prime offers members over 40,000 free Movies and TV shows and 500,000 eBooks through its Kindle library.
Amazon Prime membership has also increased for Prime’s student members (Amazon Student) from $39 to $49. The change in Amazon Prime membership fees will affect existing customers whose date of renewal falls after April 17.
Amazon released a letter to members stating the reason for the membership price increases was attributable to fuel and transportation costs. Furthermore, the letter noted that an additional 20 million products, sold by third-party merchants, are now eligible for Prime two-day shipping.
In addition to an increase in fuel and transportation, Amazon’s shipping expenses have also increased. In the last two years, Amazon’s shipping costs have rise 25% from $2.4 billion in 2010 to $3.5 billion in 2013.
Prime members are not too surprised by the membership increase. In January, Amazon released a statement in its earnings call that annual Amazon Prime membership fees could increase as high as $40, making the $20 increase less startling. In addition, Prime rates have not increased in the nine years since it has been launched.
Since it was first founded in 1994, Amazon still does not make a profit; Amazon reported a quarterly net loss of $41 million in October of 2013. Even as “fuel and transportation costs have increased, the price of Prime has remained the same,” said Amazon.
Amazon refuses to disclose exactly how many members are enrolled in Prime, but did state it was in the “tens of millions.” As a result, the $20 price increases in membership fees will give the company hundreds of millions of dollars in revenue.