Amazon.com, Inc (NASDAQ:AMZN) has increased its free shipping minimum for non-members to $49. With the online retail giant’s shipping costs going up last year due to faster delivery times for Prime customers, the website had to pass on those costs to its non-Prime users.
Amazon.com Pushes Free Shipping Threshold to $49
Amazon quietly announced it would be raising its free shipping minimum for non-Prime orders from $35 to $49 on Monday. However, orders that have a minimum of $25 worth of books will ship for free.
This isn’t the first time that the company changed its free shipping thresholds. For a long time, the minimum was $25, but that was raised to $35 in 2013.
Perhaps in order to attract more customers to its $99 per year Prime membership, which comes with free two-day shipping, Amazon decided to raise the limit. Since customers are spending $50 for free shipping then the Prime subscription may seem like a good deal.
Amazon didn’t cite the reason why it increased the limit. An Amazon spokesperson defended the increase to Re/code, in which she noted that the firm reviews its shipping options from time to time.
Moreover, the move could help cut down on its shipping costs and give its profit margins a boost. According to its latest quarterly earnings, Amazon noted that its financials took a hit because of shipping and delivery costs. Reportedly, its fulfillment costs were up 32.8 percent, which is due to the Prime Now service expansion.
Will you cut back on your Amazon spending or will you decide to bite the bullet and sign up for Prime?
Amazon Takes on Uber With ‘On-Demand’ Drivers
One way Amazon could reduce its shipping costs is with an Uber-type business model when it comes to delivery.
According to an exclusive report from Reuters, Amazon is beginning to invite drivers for a new on-demand delivery service in order to handle its regular packages. The move hasn’t been confirmed publicly, but there have been reports for nearly a year now.
The company has been testing out Amazon Flex, a home delivery service akin to Uber, in several metropolitan areas. It has been steadily growing and can be seen in Seattle, Las Vegas, Phoenix and Dallas. It works exactly like the ride-sharing app. Drivers download the app, sign up for shifts to pick up packages at small warehouses and then deliver them to residences.
It was reported last summer that Amazon was looking at a new crowdsourcing delivery service called “On My Way.” It would be a mobile app that would pay regular people to drop off packages on their way to other destinations.
This would complement the website’s initiatives to use drones and its own fleet of jets to deliver packages. All of these would help maintain its low prices, speed up delivery times and even give its razor-thin profit margins a little boost.
Although this would certainly help both Amazon and its customers, the conventional shipping firms won’t appreciate it. Amazon would soon be involved in fights with the likes of FedEx Corporation (NYSE:FDX), United Parcel Service, Inc. (NYSE:UPS) and public mail delivery organizations. It would be akin to the current battles between Uber and the taxicab industry.