The author misses one big implication of Amazon Prime: it's an invitation to start routing thousands of dollars in annual spending through Amazon.
I'm in Canada. If prime were available here, I would rarely go into a store except for groceries. Most other things I need I would just get shipped to me, much easier that way.
Not everyone in the US has figured out that free delivery of supplies is usually easier than driving to the store. But once amazon gets someone inside their ecosystem, it will be much easier to convince them to route more
and more purchases through amazon.
Given the broad range of amazon's offerings, it's a huge mistake to treat them as a book company, or an e-reader company.
While I've been a Prime subscriber for a few years and do order plenty of things from Amazon, I'm still pretty picky about what I buy from them.
Almost universally, items under $25 that ship free with Prime are more expensive than on other websites and in local stores. Especially as you get into sub-$10 items I'd normally get at a grocery store or Wal-Mart/Target/etc. The shipping cost is being built into the price.
Stuff that's sub-$10 is either not offered with Prime shipping at all, or is only sold in non-discounted multi-packs. For example, say you need some deodorant. Amazon will gladly sell you some Old Spice Classic... but only in a pack of 6 for $18. I can buy just one at a store for $2.50 or so.
In our household, my wife and I are professionals, no kids, quite a large percentage of disposable income and not such a large percentage of disposable time. We have a line item on the budget specifically to outsource things that make sense to outsource. Housekeeping, dog walking, uber cabs, taskrabbits, etc.
That's the value of Prime for us. When we need a pack of double-A batteries. Or Listerine. Or razor blades. Whatever it may be. It's a matter of supreme convenience and time-save for us to be able to just click, click, click, done. Especially so because our car sits in the garage most of the time. We can't just pop into target on our way home from work on the train. It would be a separate, special trip just for whatever little thing we need.
Even for some goods which are more expensive, once you add in Sales Tax (although that'll be solved soon enough) and gas for the car, and especially a quick time is money calculation, I would bet Amazon is cheaper overall every time.
I don't think it's fair to say the author missed this. He seems to be asking precisely if this is the strategy, and if so how well it's working.
> Is that Amazon’s real goal with the Kindle -- is Amazon in the device business only to sell Prime subscriptions, which the company sees as a key accelerant for sales across the rest of its site? And if that’s the case, how well is that circuitous business model working out? Is the Kindle helping to sell Prime? And are those Kindle-fueled Prime subscriptions moving more sales across the rest of the company’s inventory?
That's a good point. I should have said that I think the author missed the implications of increased Prime subscriptions.
The fact that other people made comments similar to mine tells me that the author's post read as though he hadn't thought through the long run advantages to having prime members, and how average people (and not just the author) are likely to behave once they realize they can get almost anything shipped to their door.
However, you're correct that he did show awareness that this might be amazon's strategy. If he wrote more on this specific point, he might actually agree with everything said here, but have some other doubts we haven't addressed. Who knows.
Exactly this - I will often go check up Amazon before I go grocery shopping, because I am a Prime member. Shipping is fast and free. In our area, we sometimes have the option for same day shipping, and products ordered in the morning arrive later that evening. Often, two day shipping results in next-day arrivals.
While Amazon isn't something I'd think of for groceries (we don't have "Fresh" in the area), there are things that it works well for -- deodorant, dog foods, that sort of thing, and where ordinarily, shipping costs would keep me from buying things online, Amazon has made that barrier go away entirely.
Now I prefer to shop on Amazon wherever I can. Even if the only advantage is one less bag I have to haul from the car to the house, that's often worth it enough for me to buy on Amazon vs. brick and mortar. I won't pay more to shop on Amazon, but for things that are same cost or cheaper, it's usually the way I go, if only to justify my Prime membership.
I'm also a Prime member but the main reason I go with them is to reduce risk. It reduces the risk that I will by a faulty product due to the reviews and return policy and it reduces the risk that I will drive to a store and be unable to buy what I originally came for which may necessitate another trip.
I also use Amazon for "groceries" just not fresh ones. In the past I've bought snacks, ramen, and peanuts from them.
That opens up a whole other can of worms though. How is Amazon making money overnighting me deodorant for cheaper than what I can buy at Safeway? I know there is an argument about all the other higher-margin items I buy from prime, but seemingly 95% of my prime purchases are for items where I would be surprised if their margin exceeded the cost of expedited shipping.
Presumably they have good knowledge of the distribution of consumer behavior and have figured out how to make money in aggregate, despite the presence of people like me. I agree with Manjoo though, at times it's hard to believe.
How is Amazon making money overnighting me deodorant for cheaper than what I can buy at Safeway
Your local safeway had to have that deodorant shipped at some point, too.
Then they had a shop clerk unbox it, put a label on it, place it on a shelf, eventually drag it over a scanner and (in america) put it in a nice brown paper bag for you.
The brown paper bag, the scanner, the shelf, the label, the clerk, and no least the brick & mortar store surrounding all that costs Safeway significant amounts of money - in addition to the truck that initially shipped the deodorant.
The thing is, most of the time, it isn't overnighted. It's a couple of days before you get your deodorant unless you pay $4 per item. For that expensive gadget you need tomorrow or the day after, it's worth it, not so for your deodorant.
There are great reasons to have Prime like carrying in less groceries, but it's irrational to buy at Amazon to justify your Prime membership because doing so doesn't provide you any additional benefit.
But once you've paid it, any given purchase is "should I drive down to the store to get it, Amazon it for 'free', or pay some other retailer for online shipping?". And at that point, the Amazon choice wins more often than not.
And while amazon does incorporate the price of 'free' shipping into their base (I often see, ON AMAZON, the same item from a non-prime-eligible vendor for $4 less than prime elligible), I know that when I order something with prime shipping, it gets there within 2 days at most, and has a hassle free return policy.
So really, the $80 serves too reasons: To defray some of amazon's costs, and to weed out serious buyers from non serious buyers -- they'll lose money on "free shipping" for people who only buy 5 items a year, so they pick a price point which is a no-brainer for anyone whom won't be a losing customer for them.
Yes, it does. The added discounts, added features (free video streaming, free MP3s from time to time, free 2-day shipping, occasional free ebooks), and convenience more than make up for the membership cost.
It's irrational not to use Amazon when you're a Prime member.
Not sure why you're getting downvoted, as from a purely economic standpoint that is exactly right. I think the point other people are trying to make is that given you have already subscribed to Prime, things you would already have purchased are now available for less via Amazon.
Well, for the most part, my expenditure on Prime is usually justified within weeks after I renew it. I work from home, in the suburbs, and do quite a bit of my shopping online.
I have, within the past month or so, bought inner tubes for my bike, other bicycle accessories for the new bike I just bought (pump, water cage, water bottle, wedge pack), a pair of boots, a new Aeropress, one paperback (for the daugher) and a smattering of Kindle books.
I don't shop just to justify the sunk cost, but it should probably go without saying that while some (or none) of those purchases may not have been the very best price I could have found them for, they were all priced reasonably, and I suspect, well below what I would have found them for at the nearby brick and mortars, without having had to leave the house for it.
That said, ignoring the 'sunk cost fallacy', as the chances of finding 'better-than-Amazon' prices locally are slim to none, I am an idiot if I don't buy from Amazon wherever it makes sense to. Obviously, packs of deodorant and shampoo are borderline, but free shipping on a lawn mower that's half the cost of Home Depot? Ideal use of Prime membership. Not exercising it means paying more, and going through considerably greater effort to do so (lugging the box around, borrowing an appropriate vehicle to carry a lawn mower, etc.)
I do the same thing, prime is great. One thing that does make me feel a bit guilty about it though is the amount of packaging wasted when I'm constantly ordering all of these things from Amazon. I usually have a couple boxes stacked up every week, even if it is just a few small items ordered sporadically throughout the month they usually ship in a box about 8x10"... That's a lot of cardboard being used now compared to going to the store... At least that's what is seems like, I haven't actually measured the amount of gasoline and plastic or paper bags used when buying locally.
Regardless though, Prime still seems like a great business model if it is working for Amazon. Every time I have to order something online that Amazon doesn't carry I always feel like I'm going back to the stone age having to pay $20 for 4 day shipping.
When I need a new pack of dry erase markers, I spend 45 seconds giving Amazon $5. Two days later, I don't have a dry erase marker problem anymore.
I don't really know how I feel about the future world that's created by universal delivery like this, but there's something wonderful about every "pick up x at store" chore being reduced to a few moments.
I have the opposite attitude, I reflexively down vote grammar nazism and a lack of flexibility for language change. Languages change organically, people spoke differently 100 years ago even and there is nothing wrong with it. It's like razing people for using the word 'like' instead of 'for example', even though they are functionally identical.
Language is a way of associating yourself with a particular group of people. How you communicate determines whether you fit into a group or not. If a comment is just "This" it adds nothing to a discussion. However, the comment above is more valid than your own, because it isn't off-topic ranting.
What you are basically saying is "I use the voting system to attempt to ostracise others because they come from another group". It is never appropriate to dismiss someone who actually has something to say because you don't like their way of saying it.
I don't deny your right to downvote me. Don't deny my right to downvote what I don't like. Please go ahead and downvote my comments if you think they don't add to the discussion (this one is a particularly good candidate for that).