Amazon’s $99 Prime problem – CNET Amazon is in a bit of a pickle. It probably would like to raise the fees on its popular Prime membership to help balance out its skyrocketing shipping costs and heavy investments in new businesses. But at $99 a year increasing Primes fee by just a buck could suddenly create a psychological barrier for many customers. One hundred dollars? Im not paying that much! That problem was apparent on Thursday when Amazon reported its latest quarterly earnings which included a 43 percent jump in shipping expenses to $3.9 billion. That spike helped depress the companys profit resulting in Amazon badly missing Wall Street earnings expectations and driving down the stock price. Amazon shares fell 6 percent to $769.69 in after-hours trading. Weve been investing quite openly in a lot of areas and continue to do so Chief Financial Officer Brian Olsavsky said on a call with analysts Thursday adding that Amazon will keep putting money into developing its Alexa voice assistant and creating faster shipping methods. We believe thats working. Were happy with the results especially for Prime customers he added. But Amazon appears to have a plan to wring out a little more subscription money from its most loyal customers and avoid more shipping costs to boot. In just the past month the online retailer rolled out new ways to sidestep that $99 ceiling. It offered three free Prime perks Audible Channels Prime Reading and an updated Prime Music that double as gateways to its monthly subscription services. The Amazon Echo smart speaker and its Alexa voice assistant are among Amazons latest big investments. CNET Amazon has been pretty clear about the fact that its membership fee doesnt cover the costs of Prime with CEO Jeff Bezos even saying Amazon wants it to be such a good value that youd be irresponsible not to be a member. Thursdays earnings however help highlight an inherent contradiction in Prime despite its huge success for the company: The more you use Primes most popular service two-day unlimited shipping the more it costs Amazon. As the company continues to mature it will likely look to beef up its often weak (or nonexistent) profits by finding new ways to convince its best customers to buy and subscribe to even more from Amazon. This strategy isnt new for the company with Amazon in 2011 offering the Prime Video streaming service for free to members which also included for-sale digital movies and TV shows displayed right by the free videos. Two weeks ago the e-retailer added a series of paid tiers to its streaming music service. Amazon now allows Prime customers to continue listening to a smaller library of songs for free through Prime Music or pay $8 monthly for a wider selection with the new Amazon Music Unlimited. That announcement followed the same model of free-for-a-little pay-for-more that Amazon introduced with Audible Channels (a slimmed-down version of a $14.95-a-month Audible audiobook membership) and Prime Reading (a slimmed-down version of a $9.99-a-month Kindle Unlimited e-book membership). Amazon Fire TV Stick with Alexa Voice Remote 1 – 5 of 18 Next Prev All three of these subscriptions offer digital media so dont include shipping costs. (While not the same Amazon this week introduced another monthly subscription this time for AmazonFresh its grocery delivery service.) Despite the steep shipping costs Prime has helped Amazon ramp up its sales and grow its rolls of repeat customers. Amazon has plenty of reasons to keep these folks happy. Prime members now reaching an estimated 65 million in the US tend to spend twice as much at Amazon as non-Prime members according to market researcher Consumer Intelligence Research Partners. (Amazon doesnt publicize how many Prime members it has but says it has tens of millions in the US.) On Thursday Amazon reported a profit of $252 million well ahead of last years $79 million. Per-share earnings were 52 cents far under Wall Street estimates of 78 cents a share according to Yahoo Finance. Revenue continued its strong rise jumping 29 percent to $32.7 billion matching expectations. But operating expenses rose the same percent to $32.1 billion. Amazon spokeswoman Julie Law said the latest Prime benefits werent meant as a trick to get people to spend more but instead were a way to introduce Prime customers to more Amazon services and give them more for their membership. Were not thinking about all these things as upsells she said last week. Were thinking about what we can carve out special for Prime members. When asked about the potential of raising Prime fees she said: We certainly dont intend to or plan to but the value of Prime is far more than what you pay for it. In Primes decade-only history Amazon raised its annual membership fee just once to $99 from $79 in 2014. This April it also started offering a $10.99 monthly subscription for Prime which works out to $131.88 a year. Does this mean Prime will stay $99-a-year for good? Probably not but for now Amazon may create even more Prime perks that could if youre interested get you to subscribe to yet another Amazon service. Lets block ads! (Why?) – Repost from: cnet Post – New Upgrade !! [V 1.5.3] U can download IT app for android from bit.ly/ITapp-v153
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