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 also use Amazon for "groceries" just not fresh ones. In the past I've bought snacks, ramen, and peanuts from them.
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.
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.
Amazon pays only the truck.
2) Overnight shipping is cheap if the distance is short, because then it's really just "shipping a short distance, which happens to be during the night".
3) You still have to pay shipping at Safeway, and you also have to pay for Safeway's smaller economy-of-scale inventory system.
4) Amazon wants you to love shopping with them, and they play the long game. They'll take a loss on deodorant to win a customer.
Also, I accidentally learned that pressing ~ twice while focused on a SlideShare presentation gives you their dev log. http://i.imgur.com/e2rBO.png
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.
It's irrational not to use Amazon when you're a Prime member.
I know these comments sound dickish, but I really believe that making a habit out of avoiding the sunk cost fallacy is helpful
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.)