Amazon raises free shipping minimum to $35

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Originally Posted by DetroitSportsFan

I'm expecting Prime to jump to at least $89, maybe even $99.

$89 maybe, $99 not likely

[Show spoiler](as it is not a prime number)

There recently was an interesting interview on NPR about amazon (transcript here: http://www.npr.org/templates/transcr...ryId=232204962 ). To quote the relevant paragraphs about Prime:

[Show spoiler]

GROSS: Amazon has this program, Amazon Prime. It's kind of like you pay a fee of $79 and then all your shipping is free for the rest of the year. And reading your book, it made it seem like that $79 was kind of arbitrary and they really had no idea when they came up with that, whether that was going to be profitable or whether it would lose money.

STONE: It was absolutely arbitrary. Amazon over the previous years - before they introduced Prime - had perfected the art of kind of fast tracking shipments in its fulfillment centers. So you could pay extra to get something in two days or three days. And they basically decided to take this capability and turn it into a loyalty service. You know, actually Bezos had met with Jim Sinegal, the founder of Costco. It was an enormously important coffee that they had and Sinegal, who is a great, you know, generous guy, explained the whole Costco model, which is a remarkable one. People pay to shop at Costco, and I think, you know, that had a sort of big impact on Jeff Bezos. And that's what Prime is, you know, people are paying to get, you know, reliable two-day delivery. But, you know, there's nothing free about it, it is $79 a year.

When they were originating Prime, they had really no idea, you know, how often people would order and how much it would cost to expedite all these shipments. Seventy-nine dollars was basically selected because it's a prime number and because it didn't seem like it was giving too much away or that it was too expensive.

GROSS: Does Amazon think it's making money with that program?

STONE: Well, Prime right now is absolutely central to everything Amazon does. I mean it's no longer just a two-day shipping program. You sign up for Prime and you get access to their, you know, to their video offerings. If you own a Kindle, you get to rent one e-book for free at a time. In fact, Amazon has really gone and built a whole separate business around Prime. It would be enormously difficult for anyone, for any analyst, to figure out if Prime is profitable or not, because it really creates an intangible - which is a customer's loyalty to Amazon.

Often, if you're a prime member, you use Amazon for most of your shopping. You know, you're more likely to buy a Kindle or a Kindle Fire tablet and you're, sort of, all Amazon, all the time.