
Amazon to Raise Fees as Revenue Disappoints - lukeqsee
http://www.nytimes.com/2014/01/31/technology/amazons-shares-fall-as-revenue-disappoints.html?nl=todaysheadlines&emc=edit_th_20140131&_r=0
======
aresant
Prime to me means "Free 2-day shipping"

I am a heavy Prime user.

I understand and accept the price raise, but as the article quotes "The more
expensive Prime is, the more they are going to have to live up to their
promises."

One promise that I feel is broken every day is on display with the "Add-On
Items"

These are just annoying.

They show up in "Prime Only" searches and are typically <$5.

Which I understand Amazon really can't ship for free.

But there is literally no way to check out with just that item until you add
up to $25, and it's typically stuff I actually need quickly.

Take thumb tacks.

They show the first result as $2.48 "add-on" for 100 of them.

Or you can select another package of 100 for $6.05 that IS actual Prime and
shipped in 2-days.

The "add-on item" is just a confusing concept, that makes me - as a consumer -
feel like Amazon's "2-day free shipping" promise is broken on a daily basis
when I see these results.

Hide the results from me, show me how to hide the results, or charge me $2.00
extra to ship "Add-On Items" and problem solved.

But otherwise it's a constant reminder that Amazon hasn't kept their promise
that I originally signed up for, even though I believe their intent is to
offer more selection to consumers.

~~~
GauntletWizard
What Amazon needs to do is arrange for weekly shipments. I love prime, but I
pre-order a lot of stuff, and often I'll have a week where I receive shipments
three or four days in a row; One impulse buy I bought right then, two things I
placed orders for months ago and months apart from each other, that just
happen to come out at the same time.

Imagine if I could have them consolidate those shipments; Get a weekly
shipment for most items, or get it via normal prime when it's something I
really need fast.

~~~
pkulak
They are probably coming from different parts of the country too, though.

~~~
jonknee
I'm sure they could still save money because it could be less time sensitive
and would include only one doorstep delivery for all orders instead of one per
order.

One order may need to go by air if it's at a distant warehouse, but another
may go ground because it's available close by.

I'd like it solely for the convenience--several times I have wanted to order
something but knew I would not be in town when the delivery happened. I'd love
to say "deliver it to me next Wednesday" and Amazon figures out the cheapest
way that would work instead of having to remember to make my Prime order on
Monday.

------
jader201
_> “They don’t think they will lose customers,” Mr. Munster said. “They are
doing this from a position of strength.”_

I don't see how they think going from $80 to $120 per year for Prime will not
cost them customers. We just subscribed last year (after being customers for
several years), and I was still hesitant to do it then, because we only take
advantage of it when we spend < $25 (we rarely use Prime video).

I'm thinking there are many in the same boat, and those are the customers they
will lose.

~~~
notatoad
I think amazon knows perfectly well that they will lose customers by this.
They're doing it so that at the next shareholder meeting, they can point at
their declining revenues from prime and say "hey, look you idiots. We know
what we're doing. leave us alone".

Amazon has always been very careful to make exactly as much profit as they
choose to. Their sales volume is huge enough that they could probably raise an
extra $500mm by tweaking their pricing algorithm without anybody even
noticing, instead they have increased prices in the most visible way possible.
This has to be about sending a message, not about making money.

~~~
eyeareque
Amazon's advantage in this space is not what is once was: You have to factor
in that we now get charged sales tax in California. Also, no-hassle and no
time limit return policies at Lowes, Costco, Bed bath and Beyond, etc, and
internet price matching, Amazon purchases are not as appealing to me as they
once were.

Example: I can buy Nest Protect on Amazon for exactly the same price as it is
from my local Lowes. However, with Lowes I get the ability to return it at any
time for any reason, in person, without the return shipping price or hassle.
I'm going to buy it from Lowes, where in the past I would have just used my
Prime account to buy it from Amazon.

~~~
ac29
>You have to factor in that we now get charged sales tax in California.

You have always been obligated to pay sales tax on purchases in California,
its just that seemingly most people lie on their taxes and dont pay it.

see:
[http://www.boe.ca.gov/pdf/pub217.pdf](http://www.boe.ca.gov/pdf/pub217.pdf)

~~~
eyeareque
Yeah, but how many people actually do that? I bet it is a fraction of a
percentage of the population.

------
jakewalker
Lately, my Prime deliveries have been sent via UPS Mail Innovations, which
relies on the USPS for last mile delivery. This inevitably turns 2-day
delivery into 1 week plus delivery, due to the USPS's incompetence where I
live. Complaints to Amazon result in a free one month extension of Prime
benefits, but they can't stop the service from being chosen on future orders.

Unless this changes soon, I am likely to let my Prime membership expire, as it
has become useless to me because it is no longer reliable. Any attempt to
raise the fee while still using USPS for last mile delivery will be met
absolutely with cancellation.

That said, if they raised the fee and promised to use only reliable (e.g.,
UPS, FedEx, hell, even Lasership/OnTrac), I'd take the deal.

~~~
ck2
prime? or subscriptions

subscription use that damn innovations to save them 25 cents or whatever from
ups coming to your door (which actually I am okay with but it adds a day)

I've never seen a regular prime delivery use innovations.

~~~
jakewalker
Prime! (Albiet for low priced, but not add-on, items - in the range of
$12-$18).

------
falcolas
$6.67 to $10 a month... I think this will still be worthwhile to me. The video
access alone is worth that to me, and the free 2 day shipping is just a bonus.

I can completely understand why some people might not feel it's worth it, but
IMHO $10 a month for a sizeable video library isn't out of whack with the rest
of the industry.

~~~
jawns
It seems like most of the people I know who use Prime fall into two
categories:

1) Those who use it for the free shipping

2) Those who use it for the non-shipping services, like the video offerings
and the Kindle lending library.

There is probably a healthy percentage that use it for both, but I wouldn't be
surprised if it's below the majority.

I think the people in Category 2 are more likely to be willing to accept the
higher fees than those in Category 1, for the reason you mention. Compared to,
say, Netflix, this is still a decent deal.

~~~
xur17
I'm in category 1, and separately pay for a Netflix subscription. I'd be a lot
more likely to try their video offerings if it actually worked on my devices
(Android and Chromecast). They've been purposefully NOT releasing an android
app to promote their Kindle devices, which seems like a bad long term move to
me...

------
naner
I signed up for the free prime trial during the Christmas season this year and
let it lapse (didn't cancel it) out of apathy. Granted, I use Amazon enough
where it probably makes sense. Without prime I would often purchase additional
items to qualify for "free" shipping. With prime, however, I make more impulse
buys.

I don't use any of the other prime benefits besides shipping.

Anyways, I probably can't justify $120 a year even though it is not really
much more than the $80 I am paying now. I believe when prime first came out it
was $50.

~~~
greyfade
When I signed up for Prime 6+ years ago, I felt the same way. I was hesitant
to do it, and I expected to cancel it after my free trial.

I still have it, and I've never let the service lapse, because I now do the
majority of my shopping on Amazon. I buy everything from cat food to toilet
paper, and I buy a lot of things (like DVD/Blu-ray) that I never previously
had the motivation to go to a store to buy or that I don't have the ability to
transport (like shelving units and chairs). It's supercharged my hobbies
(electronics and 3d printing), and saved me _days_ in back-and-forth to
stores.

So I suppose I'm one of those customers that can easily justify the $120, and
would be more than happy to pay more, especially if it means that Amazon will
put a little more effort into faster delivery.

------
jawns
I am not a Prime subscriber, but do buy from Amazon a lot (usually orders are
over $35 so qualify for free shipping anyway).

One thing I'd like to say about Amazon's position of strength is that if you
look at a competing service like ShopRunner -- to which I was given a
complimentary one-year membership, which just ended -- Amazon is a beast in
comparison.

I mean, even with the free ShopRunner subscription, I was still buying from
Amazon more than from ShopRunner merchants, simply because Amazon is a huge
department store with practically every retail category well represented,
whereas ShopRunner is largely a collection of specialty stores.

Is this necessarily a good thing, though? I mean, the more power Amazon has,
the less competitive it needs to be, right? That's why I have mixed feelings
about using Amazon for most of my online shopping needs; I don't want to be
contributing to a situation where all of the "little guys" are edged out.

~~~
leobelle
Shoprunner is not even remotely the same kind of site as Amazon. Comparing the
too seems like comparing Walmart with a tiny boutique.

~~~
smackfu
Well, Shoprunner is trying to be "Amazon Prime for the rest of the internet".
It's even priced the same, $79. It's a natural comparison.

------
jonknee
> The stock immediately fell as much as 10 percent, or $40. Then came word of
> the potential Prime increase, the first in the program’s nine years.The
> stock quickly shaved about half its losses, dropping only 4 percent in
> after-hours trading. Amazon shares were up sharply in regular trading on
> Thursday. They rose $18.81, to $403.01, just short of the stock’s record
> high.

A day later and it's back to being down 10%. Wall Street has had some nutty
volatility lately:
[https://www.google.com/finance?q=amzn](https://www.google.com/finance?q=amzn)

------
smokey_the_bear
I've shared my Amazon Prime membership with three other people for years, it
is an amazing deal even at 120 for us. If they cracked down on how the family
sharing works it would be more of a hit for us.

------
gcb0
I had student free prime and decided to pay the $79 or so for prime instant
video thinking it would be netflix plus 2-day shipping.

Boy I was wrong.

Let's be honest here, Netflix has some series and NO movies. yeah, it has a
few, but mostly crap or things i've already seen.

amazon instant prime is 10x worse. and netflix was bad enough already.

And besides no content, the Wii client i use, i take roughly 5min to start to
watch something in my playlist! the loading times are Horrible! and the
constant interruptions in streaming convinced me to not even look into their
cloud services.

~~~
HelloMcFly
If you think Netflix has mostly crap or movies you've already seen then either
1) you've seen a ridiculous amount of movies, 2) you're really not putting
much effort into discovering good content or 3) your real problem is with
Netflix's content discovery. Probably a combination of #2 and #3.

~~~
gcb0
I tried searching for good movies there. All were dvd only, which defeats the
purpose of paying for streaming (i.e. Being more convenient than torrents)

------
jmathai

      In my experience, a significant portion of the deliveries 
      take more than the advertised two days.
    

My experience is exactly the opposite. Rarely late, sometimes early.

~~~
CWuestefeld
It seems to vary based on geography.

I moved last fall from NJ (close to two Amazon warehouses), where I almost
always got deliveries the very next day, even for orders placed late in the
evening.

In my new home near Austin, TX, it's always two days or even longer.

------
dangrossman
Quick tangent for those saying they pay for Prime but have never used the
Prime Instant Video part --

Seeing as you're here on HN, you might be interested in one of Amazon's two
original TV series, "Betas". It's a comedy about a social mobile app startup
going through a YC-like incubator, followed by a demo day, attempting to raise
funds from VCs and angels, while spurning buyout attempts from a caricature of
Zuckerberg and avoiding hit-pieces in Valleyswag.

------
rock8y
I cancelled my Prime membership early this month after being 4 years as a
prime member. I took advantage of the 4 year($39/year) offer for Students. Am
not eligible any more now. I looked through my orders over last 4 years and
its only in the last year, I have really used the Prime to its best.

I was still thinking about getting back Prime for $79 as I enjoyed Alpha house
and as a member of Amazon Preview, I have a bit of knowledge about their
future productions. But a $40 increase would be too much for me at least.
Might consider in Summer again based on how my 6 months without prime will go.

------
chestnut-tree
From the article: _" Amazon has 237 million active customers but as a general
rule makes almost no profit."_

Does Amazon really make no profit? Or do they just have some creative
accounting techniques that means they never declare their profits to avoid
possible taxes?

Consider the case of the bookdepository.co.uk, purchased by Amazon in 2011.
Not only does the bookdepository match most of Amazon's book prices, they
offer free worldwide delivery too. Yet, unlike Amazon, they are profitable.

~~~
jlgaddis
They don't make _profit_ because they spend most of it.

------
Pxtl
Honestly, they so thoroughly trounce their competition in so many ways I can't
imagine this will hurt them too much. The "Prime" price-cut will cost them new
subscribers, but I think most of its existing users are married to the service
now. Jumping the minimum-free-shipping to $35 is unsurprising - it used to be
that value here in Canada.

------
smackfu
They have done a decent job of making the add-ons good enough that I would
stick with it if they raised it to $10 a month. When it was originally just
$79 for 2-day shipping, and the free shipping threshold was $25 otherwise, it
felt like much more of a splurge.

------
at-fates-hands
Didn't we just see an article with a ton of comments about how brick and
mortar companies should be more like Amazon?

Considering this about face on some of their more beloved policies, I'm
wondering why people are saying this is the way of the future.

------
bedhead
Price is a demand indicator. I doubt the price hike will have any impact at
all to the number of Prime members or its growth rate.

Btw, keep in mind that Prime also gets the rough equivalent of a FREE Netflix
streaming account.

------
ChikkaChiChi
Amazon needs to offer Prime for businesses. Amazon slaughters the competition
when you need something overnighted, and it was one of the primary reasons we
abandoned NewEgg.

------
ck2
Notice how on amazon you cannot search for 3rd party vendors with free
shipping.

I have to assume this is so people only use the "prime" checkbox to try to
find free shipping.

------
old5chool
Good, let them raise it; got no problem with that. Opens up room for
competitors, maybe even for you and me to make some online business a go.
Nice.

------
3apo
I wonder how the drone program is coming along? Or was it just a last minute
PR blitz to increase revenues?

------
buckbova
Classic bait and switch. Get multitudes to sign up for Prime over the holidays
and then bump the cost.

~~~
mikestew
No, classic bait and switch would be "hey, how about some Prime for $10/year?"
<user click "buy"> "oh, sorry, we're out of those. Would you like Super
Supreme Prime instead for $120/year?" I would think bait-and-switch would
really only be effective in a B&M store, though.

What you're looking for is "they raised the price for when you renew next
year."

------
redorb
They should offer(3) packages ... Free shipping prime, video only prime and a
package with both

~~~
rock8y
Video only would be really tough for them to match Netflix on price or content
in near future IMO.

~~~
redorb
beat it in price, if it was $4/mo ... it'd probably work.

------
CompleteMoron2
Aww. Just as I started watching their expensive TV shows! Alpha House season
one was _really_ good.

I also liked the shipping - but now that I have seen Paris at $75 will I want
it at $110?

~~~
acmiller
Alpha House was really, really good. Even so, I wouldn't sign up for Prime
just for Alpha House. If Amazon is serious about it's own content, bundling it
with a free 2-day shipping subscription probably doesn't make sense.

