Cost/benefit analysis for AmazonPrime

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You've probably heard of Amazon's new AmazonPrime service. The way this works is that you pay a yearly $79 fee and then all your order get two-day shipping for free or overnight shipping for $3.99/item.

I place about 5-10 Amazon orders a year, all priced above $25 to get Super Saver shipping. Most of my orders arrive within 3 days. So, basically, I'd be paying for two things:

  1. The privilege of getting my orders a day earlier.
  2. The ability to make smaller orders and still have them ship for free.
(1) doesn't seem that attractive. Certainly, if you offered to make a given individual order arrive a day earlier for $8 (the average cost per order), I wouldn't go for it. (2) is a little attractive, but I generally find it fairly easy to think of 2-3 things I want to order, which generally gets it up over $25. So, the only thing that's left is the overnight shipping. I don't think I'd be willing to pay $3.99/item for that, either.

Of course, the calculation would change dramatically if Amazon discontinued Super Saver. Typical item shipping costs without Super Saver are about $5.00 for a $25 order. I would definitely be willing to pay an extra $3/order for 2-day shipping. I wonder if that's part of Amazon's plan.

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2 Comments

Of course, if you're ordering *a lot* of stuff from Amazon, say you're a reseller even of Amazon-sourced goodies, and you're getting maybe a delivery from Amazon per day, then $79 a year is cheap!

Barnes and Noble offers the same policy--free shipping on orders of $25 or more--as Amazon. Unless Super Saver is a loss leader that BN itself is just dying to ditch as soon as Amazon does, I don't see how Amazon can get away with eliminating it without simply driving lots of customers to BN.

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