One of the things people love about Amazon Prime is its convenience.
One of the things many of us have qualms about, however, is the steady pace at which the e-retail giant has boosted prices for the service.
Related: Live Updates: The Best Lightning Amazon Prime Day Deals Today, Handpicked by Our Editors
Some of us recall 2005, when Prime first cost just $79 a year for unlimited two-day shipping on over one million items. In 2014 the price went up 25% to $99. Amazon that year also launched Prime Pantry, Amazon Photos and Amazon Music.
In 2018, the cost of Amazon Prime increased once again, this time 20% to $119 a year. This boost came just one year after Amazon launched its Amazon Prime Rewards Visa Signature Card, acquired Whole Foods, and launched Amazon Wardrobe. Two years later, it bought MGM studios for $8.4 billion.
In 2022, the service again increased, this time 17% to $139 a year — but many of us stalwart subscribers now have access to same-day delivery and more payment options.
There's a correlation here: between the cost of Prime and Amazon's acquisitions and iterations for customers. It's not as though subscribers are paying more for the same service. We're getting a lot more.
It's just a matter of whether customers can continue to justify the cost as competition strengthens.
Amazon changes the price of a beloved service
One of the more popular services Amazon Prime members can receive is grocery delivery. Especially during the pandemic, when few people could or wanted to venture outside to buy food, this convenience made the process easy and worry-free.
Last winter, though, reports that Amazon was raising the price of its grocery delivery service began to surface. Previously, orders exceeding $35 would process and ship for free.
Under the new Amazon Fresh system, here's what the pricing tiers were to look like:
- Orders under $50: $9.95 fee
- Orders $50 to $100: $6.95 fee
Orders $100 to $150: $3.95 fee
Orders above $150: free delivery
"We’re introducing a service fee on some Amazon Fresh delivery orders to help keep prices low in our online and physical grocery stores as we better cover grocery delivery costs and continue to enable offering a consistent, fast, and high-quality delivery experience," Amazon said at the time.
Predictably, members were less than enthused. Was demand so high that Amazon thought it could raise prices without incurring a penalty? Were so many people suddenly ordering groceries remotely that Amazon had to raise the cost to keep up with the cost of fulfillment? Or had demand waned, and the only way to stanch the bleeding was a price hike?
Amazon changes course on Fresh price hike
None of those questions seem pertinent any longer, as Amazon has heard the unending complaints and changed course.
A leaked internal memo, obtained by Business Insider, indicates:
“We’re always listening to customer feedback and looking for ways to make shopping for groceries easier, faster, and more affordable. As part of that, we continuously test our delivery models to see where we can make adjustments, and recently received positive feedback from customers when we piloted this change in select cities.”
Now, grocery orders valued at $100 and above will ship free, as opposed to the previous $150 threshold.
And as younger consumers increasingly prefer to pick up their own groceries, Amazon's timing for the move may be just right.
Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
