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Amazon Prime: New Shipping Program

Amazon [3] has setup an interesting new program called Amazon Prime [4]: “All You Can Eat” Express Shipping. Basically you pay $79 per year and you get free two-day shipping on “over a million in-stock items” and overnight shipping for $3.99 an item if ordered before 6:30 PM Eastern. The only other noteworthy item is that you can add four additional members as long as it ships to the same address. There are also some restrictions regarding where you are shipping to (PO Boxes, APO/FPO addresses, etc).

Is this really worth it? I have purchased hundreds of items from Amazon [3] and was always able to use the “FREE Super Saver Shipping (5-9 business days)” as long as it wasn’t a third party item. My initial belief is that if you want to instant gratification of receiving an item in two days (or one day) this may be a good program to join. If you aren’t as picky or in a rush most of the time, free shipping probably is good enough.

Let us analyze:
Book: Tournament Poker for Advanced Players (Advance Player) [5] by David Sklansky ($19.77). It’s a 245 page book that weights 14.4 oz.
FREE Super Saver Shipping (5-9 days) – N/A (under $25)
Standard Shipping (3-5 days) – $3.99
Two-Day Shipping (2 days) – $9.48
One-Day Shipping (1 day) – $16.48

Well… we picked a standard book that was eligible for the free service (if we ordered more) and the two day shipping was almost ten bucks and the one day was nearly $17 dollars!

Electronics: SANDISK SDMSPD512768 512MB Memory Stick Pro Duo Card [6] ($62.99). They pegged this card at a pound but it’s probably a fraction of that.
FREE Super Saver Shipping (5-9 days) – FREE
Standard Shipping (3-5 days) – $5.58
Two-Day Shipping (2 days) – $10.48
One-Day Shipping (1 day) – $17.48

Hrm… we can get it shipped to use in a week-plus or we can pay to get it ASAP.

Kitchenware: Circulon Classic 14-Piece Cookware Set [7] ($199.99). This beast weights 31 lb. and needs to be shipped by itself but still qualifies for free shipping.
FREE Super Saver Shipping (5-9 days) – FREE
Standard Shipping (3-5 days) – $23.28
Two-Day Shipping (2 days) – $39.68
One-Day Shipping (1 day) – $76.68

Wow, 31 lb. sure is expensive to ship. I think we’re getting the idea here thought….

Amazon [3] is probably tired of the free shipping number on their balance sheets getting larger and larger (according to this Reuters article [article archived] they lost $197M in 2004) and perhaps they’re trying to get some payment? Wrong. They believe this plan will cost them even more in shipping losses (free shipping, still free, pay shipping now makes 2 day free and even faster shipping cheaper) but Amazon [3] is in the business of capturing market share, not showing profitability.

What does this mean for you? My initial thoughts were proved correct: Semi-instant gratification (2 days) or really-close-to-instant gratification (next day) has been made cheaper by quite a bit, especially for high volume consumers. The rest of us who aren’t in a hurry simply won’t benefit from the new plan, but we probably knew that before we started.

For more info, you can check out the Amazon Prime FAQ [8] for all the other specifics we glossed over.