Shoppers now need to purchase at least $49 worth of goods to qualify for free shipping instead of the previous $35. This comes three years after the previous increase, which saw rates jump from $25 to $35. The current increase will help Amazon cover growing shipping costs but more importantly increase the appeal of its $99 per year Amazon Prime membership.
Click here to sign up to join Unilever’s Digital and eCommerce Capabilities Manager, Jenna Spivak Evans, along with Clavis Insight’s Danny Silverman on March 30th for a case study on how the consumer goods leader is executing best practices to capture and leverage online store ratings and reviews.
Amazon has been taking many steps to edge users toward signing up for a Prime membership. Amazon marketed their Prime Now app along with the Super Bowl to advertise the benefits of 2 hour delivery. The company also created a new sales event, Amazon Prime Day, in 2015 to expand awareness of the membership.
More recently, Amazon has made changes to how shoppers access AmazonFresh. As Amazon’s premium grocery delivery service, previously accessible through a standalone website, is integrated into Amazon.com in select markets, consumer awareness of the Fresh service is set to increase. While online grocery sales still make up less than 1% of total grocery sales in the United States, penetration is accelerating.
With these changes, along with the higher shipping minimum, Amazon has implicitly created different tiers in which it can bucket shoppers and keep them hooked on the Amazon ecosystem:
- Standard Customer – Access to the classic Amazon store while paying for shipping on items unless their order exceeds $49.
- Amazon Prime Customer – Access to the classic Amazon store and PrimePantry (along with non-shopping benefits like Amazon Prime Video) while paying $99 per year. This fee covers guaranteed 2-day shipping on most items. In the 20 U.S. cities where Prime Now is available, Prime members also have access to ultra-fast and free two hour delivery.
- AmazonFresh Customer – Access to the classic Amazon store, Amazon Prime, and Fresh items while paying $299 per year.
How will this increase Amazon's dominance?
Minimum purchase fees vary across retailers, from as low as $25 at Target.com to $50 at Walmart.com. Will recent price hike drive some customers to a competitor? It may, but Amazon will hope to more than offset lost shoppers by an increase in Prime and Fresh memberships. It has been noted that Prime members spend more than double the amount of money when compared to normal members and Fresh members likely shell out even more.
As Clavis pointed out last week, Amazon is integrating AmazonFresh into Amazon.com starting with Southern California. The appeal to consumers and brands is clear: Amazon will become a one-stop website for the entire grocery store. From fresh produce to bathroom toiletries, Amazon will offer a way for consumers to purchase items for their entire home.
As Amazon’s value to consumers continues to grow so does its importance to brands. Remaining relevant in search results will continue to be a priority as the list of items sold on Amazon grows. As competition among brands on Amazon increases, attracting user reviews and creating clear and powerful product descriptions will be a top concern. If Amazon is able to further increase shopping cart sizes and consumer engagement, they will only further increase the need for brands to have a comprehensive eCommerce strategy on Amazon.
As evidenced by the strategic changes afoot at Amazon, no other website is building loyal high spending customers like they are, so it is key for brands to become a leader in any given category. As Amazon’s strategy in the eCommerce space continues to evolve, brands will have to stay vigilant to get the most out of the platform.
Clavis Insight works with global brands to measure and manage their presence and performance across online retailers. We offer comprehensive measurement and insights capabilities for Amazon, the most sophisticated and complex of all online retailers, with Advanced Amazon Analytics and Advanced Review Diagnostics to enable our clients to win at this this key online retailer and beyond.
To learn how consumer goods giant Unilever uses Clavis Insight’s Shopper Review Diagnostics to monitor the impact of review content, enabling it to organize, listen to and engage with online store ratings and reviews, sign-up for this March 30th Webinar.
