Amazon Raises its Free Shipping Threshold: what it Means for Amazon Shoppers & Everyone Else

Last week, Amazon raised it’s free Super Saver shipping threshold from $25 to $35. The previous $25 minimum order to qualify for free shipping was in place for more than a decade.

For those who buy a lot of their goods on Amazon, who don’t have an Amazon Prime membership, it’s big news.

Actually, since Amazon set the low bar for free shipping in the the e-commerce industry, if you buy anywhere online, it’s big news. Many other retailers followed Amazon’s trend of setting lower free shipping thresholds, and will certainly follow this trend of a higher one.

Why would Amazon make this move when a large part of its rise in popularity was due to the low threshold that had made it famous?

Three reasons:

  1. amazon free shippingAmazon lost $3 billion in shipping costs in 2012. Although it’s hard to feel sorry for them – tis the price for building ridiculous market share dominance. Alas, shareholders don’t like it.
  2. Amazon wants to push more of its members to Amazon Prime – with its $79.95 annual subscription price – a high margin service offering for the company that locks customer loyalty.
  3. Amazon has won the market. You don’t make this profit-bearing move unless you are completely confident you own the market. Just like Google with search and YouTube with online video, it’s over. Game. Set. Match.

On point #2, in its statement on the website, Amazon plugs its Prime service.

“Millions of Amazon customers have already made the choice of faster shipping by becoming Amazon Prime members. Prime includes unlimited Free Two-Day Shipping, with no minimum order size, on more than 15 million items, as well as unlimited streaming of over 41,000 movies and TV episodes through Prime Instant Video and access to over 350,000 books to borrow through the Kindle Owners’ Lending Library. The service is so popular that more than a year ago we began shipping more items with Prime than with free shipping.”

I had previously signed up for a free 30-day trial of Amazon Prime in order to ship something that I would have otherwise had to pay for.

I wouldn’t call myself an “Amazon power user”, but if I am going to buy something I would have a difficult time finding locally, it usually is my first destination (and often results in the lowest price).

However, very few (if any) purchases are “urgent” enough for me to simply not exercise a little patience until I have enough items to hit the free shipping threshold. Raising the threshold from $25 to $35 won’t change that. And that’s a lesson best learned by every reader here – patience is a virtue – and that’s very true when it comes to free shipping thresholds.

This is a bit of a concerning signal from the company if you’re not on the Prime bandwagon. It’s a start of a trend that shareholders will probably love. $50 is next, and then who knows… If you’re not already a Prime member, the company wants to ensure you become one.

And even for those who are, this is a bit concerning. Once you’re locked in to Prime, how many price increases will you stick around for?

Amazon Shipping Discussion:

  • Were you upset or indifferent to the Amazon free shipping price increase? Why?
  • Are you an Amazon Prime member? Why or why not?
  • Has or will this increase push you to Amazon Prime? If not, what free shipping threshold would?

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