Newsletters
Customer Relationship Management News NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
Home CRM Systems Customer Service Contact Centers Business Intelligence More Topics...
Eliminate costly downtime!
Find out how with Free White Paper
& enter to win a Samsung Galaxy Note

www.apc.com
CRM Systems
24/7/365 Network Uptime!
Average Rating:
Rate this article:  
Will Amazon Prime Price Hike Drive Mass Exodus?
Will Amazon Prime Price Hike Drive Mass Exodus?

By Jennifer LeClaire
March 13, 2014 10:45AM

Bookmark and Share
Amazon's decision to up the cost of its Prime service from $79 to $99 might not dissuade its most frequent and loyal customers from continuing their memberships. But Amazon will lose roughly 10 percent to 15 percent of less-frequent users and have trouble signing up new members because of the Prime price increase, said analyst Greg Sterling.
 

Related Topics

Amazon
Kindle
Video
TV
E-Commerce



The e-commerce giant is boosting the price of its Amazon Prime membership service from $79 to $99 a year. In an e-mail to its customers, Amazon blamed the price increase on rising fuel and transportation costs, adding that the price of Prime has remained the same for nine years despite those soaring costs.

Customers who sign up for the Prime service get free two-day shipping, unlimited instant streaming of thousands of movies and TV shows with Prime Instant Video, and they can read free Kindle books each month.

Trying to head off any objections to its pricing decision, Amazon pointed out how much better Prime is now than when it was launched in 2005. "The number of items eligible for unlimited, free two-day shipping has grown from one million to over 20 million. We also added unlimited access to over 40,000 movies and TV episodes with Prime Instant Video and a selection of over 500,000 books to borrow from the Kindle Owners' Lending Library,” according to the e-mail.

Justifying the Price Hike

We caught up with Greg Sterling, principal analyst at Sterling Market Intelligence, to get his feedback on Amazon raising its Prime membership rates. He told us Prime has been a strategic loyalty program for Amazon.

In fact, he called out the fact that Amazon has more than 20 million Prime members. That means the membership service is generating about $1.5 billion in annual revenue for the e-commerce giant.

“There are also likely tiers of Prime members -- those who use the service more and less extensively,” Sterling said. “In its e-mail to users notifying them of the price increase, Amazon attempts to justify it with benefits beyond free two-day shipping, such as free movies and Kindle lending.”

Mass Exodus Coming?

Will Amazon see a mass exodus from its Prime service? That remains to be seen. Sterling, for one, expects Amazon will lose some members in the wake of the price increase.

Of course, there are some who renew automatically and will not even notice the $20 increase, he predicted, while others consciously decide the $100 a year isn’t worth it. That may depend in the end on how much those consumers are taking advantage of the free two-day shipping, IInstant Video and other Prime perks.

“It remains to be seen since these are probably Amazon's most frequent and loyal customers, which is a mitigating factor against defection from the program,” Sterling said. “I'm going to guess however that Amazon will lose roughly 10 percent to 15 percent of current members and have additional difficultly signing up new members because of the price, which looks like pre-paid shipping to most people on the outside.”

Amazon Keeps Adding

Amazon has increased what it offers to customers over the last nine years. Most recently, the company announced a content licensing agreement with BBC Worldwide North America that will make Prime Instant Video the exclusive online-only subscription home for streaming season one and future seasons of the dramatic thriller "Orphan Black."

And in February, Amazon inked a content licensing agreement with Metro-Goldwyn-Mayer Studios that offers Amazon Instant Prime the same exclusivity rights for the MTV series "Teen Wolf."

Also in February, Twentieth Century Fox Television Distribution made Prime Instant Video the exclusive go-to for the popular period drama "The Americans." The list of content deals goes on and on. As Sterling said, time will tell if there’s enough value add for consumers to re-up their annual Prime memberships.
 

Tell Us What You Think
Comment:

Name:

Thomas L.:

Posted: 2014-03-17 @ 12:12pm PT
I turned off the auto-renew on my Amazon Prime membership 2 days after they made the announcement. Amazon's prices have been slowly climbing for the last few years and now that Amazon charges sales tax in my area I'm just not using their site as much as I used to.

Gale:

Posted: 2014-03-15 @ 2:48pm PT
Not at all! After 9yrs a little raise is fine. Can't beat the shipping benefits to regular users. Netflix tested the rate rise and at it. So will Amazon. The airlines do it too. Whatever goes up goes down anyway!



Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.


 CRM Systems
1.   Oracle To Buy TOA Technologies
2.   Salesforce App Personalizes the Sale
3.   Microsoft Takes CRM to Gov't Cloud
4.   Salesforce1 Adds Mobile Features
5.   Salesforce Partners with Philips


advertisement
Salesforce App Personalizes the Sale
New CRM and sales automation tools.
Average Rating:
Microsoft Takes CRM to Gov't Cloud
With Dynamics CRM in early 2015.
Average Rating:
Salesforce1 Adds Mobile Features
To access, analyze, act on biz data.
Average Rating:


advertisement
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
New 'Backoff' Malware Slips Undetected into Retail Systems
'Malicious actors' are using a new variety of malware to access consumer payment data remotely through point-of-sale systems, according to a report from the Department of Homeland Security.
 
IBM Beefs Up Identity Intelligence Security Solutions
Big Blue is betting big on identity intelligence. IBM just acquired a private firm with security software to govern user access to apps and data across cloud and on-premise environments.
 
USB Security Flaw Lets Hackers Hijack PCs
Hackers can use the firmware that controls USB functions to take control of computers, say security experts. That means there may be a new class of attack for which there are no defenses.
 

Enterprise Hardware Spotlight
AMD's ARM-Based Opteron Out in $3K Dev Kit
It's dubbed "Seattle" and it's AMD's first 64-bit ARM-based Opteron processor. The low-power chip is being released as part of AMD’s Opteron A1100-series developer kit, and aimed at high-end data center needs.
 
Apple Updates MacBook Pros, Cuts Prices Up to $100
The popular MacBook Pro laptop line just got an update and a price cut of as much as $100. The MacBook Pro with Retina display now includes faster processors and double the memory.
 
Dell, BlackBerry Not Sweating Apple-IBM Alliance
IBM's recent move to partner with Apple to sell iPhones and iPads loaded with corporate applications has excited investors in both companies, but two rivals say they are unperturbed for now.
 

Mobile Technology Spotlight
BlackBerry Messenger Now Available on Windows Phone
BlackBerry's free Messenger chatting and voice app is out of beta and widely available for Windows Phone users, the company said. BBM offers secure messaging, Groups, Voice, Channels and more.
 
Virgin Mobile Offers Custom Smartphone Plans
As the wireless carrier wars continue heating up, Virgin Mobile just threw the customization coal onto the fire. The firm has debuted a no-annual-contract plan with rates based on individual use.
 
Collaboration Provider Asana Revamps Mobile App
Asana, a collaboration software provider started by a Facebook founder, is now out with a rebuilt native iOS mobile app. It replaces one that even the company admits was not up to par.
 

Navigation
CRM Daily
Home/Top News | CRM Systems | Customer Service | Contact Centers | Business Intelligence | Sales & Marketing | Customer Data | CRM Press Releases
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.