Amazon (AMZN) is not shy about promoting the idea that it offers free shipping.
As shipping costs increase, the e-commerce company is shifting the cost of providing the 'no cost' service onto other fees and requirements.
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"It is an open secret that most retailers raise product prices to subsidize free shipping. Still, product inflation and soaring shipping costs are making the service unsustainable as the prospect of recession threatens to wallop already-flagging online spending," Reuters reported.
As these trends continue, consumers who use services such as Amazon or who order directly from retailers are seeing prices continue to rise.
"The days of free delivery are numbered," said Ken Morris, managing partner at Cambridge Retail Advisors, according to Reuters.
An analogy could be made that retailers who ship products are similar to airlines that charge for services such as better seating and luggage transportation, Morris also explained in the story.
Amazon is offsetting shipping costs by increasing subscription fees and setting price minimums to offer free delivery.
"The online retailer, which recently hiked the annual Prime subscription price by $20 to $139, is now offering 'free' same-day shipping for Prime members in at least a dozen U.S. cities, including Los Angeles, Chicago and Philadelphia," Reuters reported. "There are strings attached, however, as the service is free only on orders of at least $25, and costs $2.99 when orders fall below that."
Amazon has prioritized fast delivery in the past, but continuing to do so is becoming more difficult.
"Getting things to people same-day or within a certain number of hours doesn't seem to be first and foremost anymore," e-commerce consultant Chris McCabe said, also according to the Reuters report.
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