Amazon Prime to See Price Hike

Free shipping has just got a lot more expensive. On a phone call with investors on Thursday, Amazon executives announced a price hike for their popular Amazon Prime frequent shopper program. Starting May 11, the price of an Amazon Prime membership will increase to $119, up from the current price of $99. Renewals to the Prime service will face the increase beginning on June 16.

Launched 13 years ago, Amazon Prime is the holy grail of online shopping and shipping services, luring customers in with free two-day shipping on millions of items sold on the webs site. Amazon CFO Brian Olsavsky pointed to the ever-increasing value-add of the Prime service as a reason for the price increase. In recent years, Amazon has greatly expanded its digital benefits via their patented streaming app, including Amazon movies, music, and original series. In addition to the added entertainment services, Amazon also cited the expanded reach of its Prime-eligible products as a reason for the increase. Prior to the last increase, Amazon had roughly 20 million products eligible for the special two-day Prime shipping service. That number tops over 100 million today, greatly increasing the reach of the products.

It has been a record-breaking first three months of 2018 for Amazon. In addition to the Prime price hike, Amazon also released its first-quarter sales marks, which topped $1.6 billion in profit during that time period. In a letter to shareholders last week, Amazon CEO Jeff Bezos revealed that Amazon had a staggering 100 million Prime subscribers around the globe.

News of the price increase is not unexpected, as Amazon previously raised the price of the month-by-month service from $10.99 to the current $12.99. Today’s announcement of an annual increase is the first price hike since 2014 when it increased from $79 to $99. The news came as good news to investors, as evidenced by the sharp 7 percent rise of Amazon stock in the after-hours trading following the announcement.

Leave a Reply

Your email address will not be published. Required fields are marked *