Amazon.com recently announced changes to their Free Super Saver Shipping program. First, the minimum order size for “free shipping” has increased to $35 from $25. Second, it is officially getting slower:
With free shipping, your order will be delivered 5-8 business days after all of your items are available to ship, including pre-order items.
So not only will it take up to 2 weeks to get your stuff, that is only after every single thing is ready to ship. I’ve already noticed their “Free Super Saver Shipping” getting slower and slower. “ParcelPool” seems to be code for “let it sit around until you absolutely have nothing else to do.” Personally, I’m okay with a $35 minimum. But the slower shipping is why I don’t shop at Amazon as much anymore.
Various media outlets have their theories on why this happened – higher shipping costs? Amazon about to record huge losses? Shareholder revolt? My interpretation: The loss-leader party is starting to wind down.
Up until now, Amazon has taken a “loss leader” approach to building up their business. Their margins are razor-thin… In 2012, they sold over $60 billion dollars of stuff yet still lost money. Why?
- To crush the competition. Is there any direct competitor to Amazon? Buy.com? Ha. There are some tech places like Monoprice and Newegg that have a loyal following. eBay is cheap but inconsistent. So we’re left with the brick and mortars – Walmart, Target, and Costco.
- To change your shopping habits. They also need to promote a huge behavioral change where when you need something you don’t think Walmart or Costco, you think let’s go on Amazon and just click and buy. It takes lots of repetition to gain that kind of trust and habit formation. Low prices and fast, free shipping will do that.
During this time, consumers like myself have been happily buying things cheaper from Amazon than anywhere else, from laundry detergent to diapers to hard drives. Why waste the time and gas going anywhere else? I’m afraid they are almost done giving out the free drugs. Are we addicted enough to finally allow them to make big profits?
It seems like they are switching to the Costco model. They want your $79 Prime membership fee, and then they hope to break even on everything else by giving you a nice solid low price along with free 2-day shipping. (Free 3-month trial with Amazon Mom, Free 6-month trial with Amazon Student)
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I guess if I were a shareholder I’d be applauding….but just plan ahead a bit, be patient, sooner or later someone will develop an app so you can figure what items are all in the same distribution center and thus reduce wait time….and it almost as good as before.
I think it is a strategy to move people over to Amazon Prime memberships. I am a Prime member for the audio/video content and get the prime shipping as a fringe benefit. At this point I am pleased with Amazon Prime and will be renewing when it expires. BTW, I joined through a deal offered with the purchase of a Kindle HD.
I think one reason that the free super saver shipping takes so long is that they shuttle all of your items to one warehouse and then mail them to you in one box. Amazon has close to 75 warehouses and I don’t expect that they keep all of their product line in each one. They probably have their own trucks that can move product between them for dirt cheap, it is just the time that it takes to get everything to one place where they can then mail it to you. People who pay more for shipping (Prime or Standard Shipping) get their stuff mailed directly to them from each warehouse.
One thing I have found is that if there is an item I want to buy but it doesn’t meet the minimum threshold for the Free Super Saver Shipping there is often a third party merchant selling that item on Amazon for the same price or just a tiny bit more including shipping. So I order it from the third party seller and they usually ship it faster than Amazon would have and I don’t have to add more stuff to my order to get “free” shipping.
I thought I read a year ago or so about how Walmart was testing the same-day delivery of items and they found that people didn’t want it THAT fast and the sweet spot seemed to be about 2 days.
Old post, I know, but people don’t want it THAT fast? hahahaha
The WORST thing about buying anything online is having to wait for it to ship to you. Good grief. People don’t want it THAT fast….hahaha. That is the dumbest thing I’ve read in a long time. Thanks
Totally agree with you. They also have recently raised prices on everything, but sneakily on diapers and wipes they kept the price the same but reduced the number of diapers/wipes in the package. They did send an email about it for my Subscribe and Save, but it’s easy to miss for most busy parents. Looks like it’s time to switch to Up and Up at Taget. The only thing that kept me using Amazon was the tax savings, convenience, and ability to find certain things I can’t at brick and mortars. Looks like almost every advantage they had is going away slowly.
I second the Target Up and Up diapers. They are very high quality and a good price.
Any bricks-and-mortar bookseller can tell you that Amazon has been selling books below cost for years. They have been surviving on the enormous float of cash from Wall Street investors who seem to love their plan of eventually wiping out all competitors. It’s a ridiculous model which will eventually fail, but in the meantime extremely destructive of local businesses and a great boon to consumers in search of the cheapest price.
Don’t forget that you can SHARE a Prime membership between family members VERY easily. If someone in your family is already a member (and they like you enough), you just piggyback on it and get the benefits for free. If your family is not signed up yet, you could split the cost going into it and make it very affordable. Here is the relevant link: http://www.amazon.com/gp/help/customer/display.html/?nodeId=200444180
I piggy-backed off my Mom’s account as soon as I head the min was raising to $35.00. Cheers!
Keep in mind that with Amazon Prime (even the student one), you can add a bunch of people to your account. My sister has it and she added myself and my parents to her account so we all get free shipping. We don’t get free video streaming that way, but I don’t care about that. Seems like there is really no reason to get upset here…
@Cnj – the three things you listed are still true. They still have lower prices for the most part, you can still get very quick shipping, you still get the tax savings (depending where you live) and you still have the convenience of ordering from anywhere – ran out of toothpaste? Grab a phone and twenty seconds later you can forget about it. About as much time as it would take to write it down on the shopping list.
@Donald – their model has been working for almost 20 years now, surviving great many doom and gloom predictions through many tough periods.
I just read “One Click” – a book about Bezos and Amazon. Very interesting perspective.
There are rumblings that Amazon is aiming to move their shipping in house. Right now they are spending a lot of money on shipping companies that have their own margins. Amazon, naturally, would want to keep those margins for themselves. This may be a way of tamping down expectations or lowering the expected standards before their own shipping roll out.
More than anything, I think they’re trying to drive people to the Prime subscription model. I wonder how long it will be before they raise the price on that…
It’s worth noting, however, that they introduced Super Saver Shipping at that $25 level way back in January 2002. If you run the numbers, $25 in 2002 is worth about $32.50 right now, so this change isn’t really out of line.
But if the shipping time is degrading (I wouldn’t know b/c we’ve had Prime since it was first introduced) then that’s another issue entirely — and a much bigger problem in my book.
I found this article buried in my local paper last month: http://www.philly.com/philly/business/technology/Amazon_lobbies_heavily_for_Internet_sales_tax.html?c=r
Amazon has been lobbying Washington to have consumers pay sales tax. Small online retailers would get crushed with the costs of filing returns in individual states, resulting in Amazon getting bigger and leaving us less choice. I did sign up for Amazon Prime and have been happy with the service but knowing that Amazon wants me to pay more tax on top of all the other taxes I pay – with the intent of squeezing out small online retailers – is a real deterrent.
The saying is true “Nothing good last for ever” Amazon used to be my main go to store for shopping. At times I wouldn’t even check to see if their price was the lowest, I would trust they were. But now I am being charged sales tax, $35 for free shipping and a lot of times their prices are not the cheapest anymore. I wont give up on them yet but I do more comparable shopping for the best deal also you can get around the shipping by becoming a prime member and have others join under you and share the membership cost for free 2 day shipping.
Michael’s spot on. I’ve been an Amazon Prime subscriber for several years so I hadn’t thought about Super Saver offer for quite a while.
But many of my friends have told me over those years, “Why should I pay $80/year for Amazon Prime? All I have to do is wait for $25 worth of stuff to pile in my shopping cart and I get free shipping anyway. And it usually arrives in 2-3 days anyway.” It seems like this new policy is aimed at enticing a few more folks of that mindset into Amazon Prime.
In my experience, Amazon super saver has always been like this, going back many, many years. Sometimes it will take 3 days, sometimes it will take two weeks *or more*. I talked to them several times when I didn’t get a shipment, and their reasoning for leaving something sitting in the warehouse is that they wait for bulk shipments with the carriers at lower prices. If I wanted a product within a week I had to order it with paid shipping, because super saver was a huge gamble. I actually used newegg for electronics more than amazon specifically for this reason for a while – their free shipping offers were more reliable (these days newegg doesn’t have as much free shipping).
So aside from the higher price, I don’t see anything new here, they’re probably just being more honest to cut down on complaints from customers.
That said, I’m one of the suckers now – I have prime and make good use of Amazon Lockers in my neighborhood. I love both services, and they have saved me a ton of trouble (I really hope the lockers stick around a while).
Its’ absolutely worth the expense to get Amazon Prime. Monthly, it amounts to $6.67 for not only free two day shipping on almost everything, but free movies and shows with Instant Prime Movies. I watch showers like Fraiser, Ally McBeal, Gilligan’s Island, all on Demand at my leisure. I know the shows are old, but there are a few goodies for everyone in there. You can even add a few members and split the cost if $6.67 is too much for these conveniences. Waiting to get to $25/month for toothpaste and toilet paper and hoping to get it somewhere between a few days and a few weeks just doesn’t seem worth the savings. But then again, my wife and I live in NYC and dont own a car so services like Amazon Prime really make shopping a breeze. To each their own.
Yeah I too suspect this is also to motivate people to move to Prime. Course it will also save Amazon money on shipments in general.
I think you’re right on. Amazon is moving out of the loss leader mode into max profits mode. Can’t really blame them for wanting to make more money.
I usually price check when buying stuff in brick mortar stores, and I’m surprised to find that Amazon is rarely cheaper for regular items anymore (compared to places like Target, Babies R Us, etc). And now they charge sales tax, $35 minimum for delayed shipping. For me, it only makes sense to find a really good deal for Amazon on a high priced item.
I understand their motivation to move people to Prime Membership (Costco model). But Amazon’s stuff isn’t really cheaper than brick and mortar anymore, so I’m not motivated to pay for Prime.
Amazon rarely does something without proper research. They just figured that $35 is a new sweet spot and going with that. All e-commerce sellers and services providers calculate their freebies.
BTW, recently they also changed discounts on subscribe and save and makes you bulk on items sending them to you once a month. That negatively affects me personally but I guess they figured that people who once “subscribed” (for serious, not just to cut price for one-off) have very little motivation to jump off.
Thank for the reminder, I previously wrote about how you can share Prime with 5 coworkers while still following all their rules:
https://www.mymoneyblog.com/share-amazon-prime.html
I have minimized my Amazon shopping as much as possible. Sooner or later Amazon is going to have to settle up with the States on the sales tax issue. I wouldn’t be surprised if they turn or their sales records to the States either voluntarily or as part of a settlement. Then the States send out tax bills for all of your past purchases. Wouldn’t that be nice to open that bill… Don’t think they will do it, think again. It has been done with sales of cigarettes over the internet. Have read stories of locals sent tax bills for thousands of dollars for past cigarette purchases.
Amazon is the big kahuna, so I have minimized my purchases there. Better to use smaller online retailers doing business in only one state that will be less of a target. Using Newegg, B&H photo as much as possible.
In my household we love Amazon. We probably average at least one order per week, more if you include diapers.com, which they now also own. BTW this move just brings their threshold for free shipping up to that of Diapers.com. I have paid for shipping from Amazon less than five times in my life. Generally I just park things in my cart until I need $25 worth of stuff and then place my order. I can do the same for $35. I think most of our orders are already above $35 when we order anyhow. Their free shipping is pretty fast to our house, but that is probably a function of our location. If it slows considerably we will consider Prime. In some cases free shipping is too good to be true. I order auto parts from Amazon if they are large and heavy. I’ve actually ordered $100 worth of brake rotors for which shipping would have been $40-50 and by planning in advance the shipping is free.
Coming into this discussion AFTER the 2013 holiday season I can confirm that Amazon free super saving shipping has definitely slowed. (I do most of my holiday shopping on Amazon.) Some orders that qualified for free super saver shipping, fulfilled by Amazon, and in stock at a nearby fulfillment center, were not even shipped until 5-6 calendar days AFTER the order was placed.
Comparing this to other online retailers and even “Amazon 2012”, I am absolutely convinced this delay prior to picking & shipping is (as others have speculated) designed to increase the appeal of Amazon Prime (at approx. $80/yr). I have not yet given-in to the temptation of “Prime”, but as Amazon has calculated, I am just about ready to go ahead sign-up for the 30 day free trial which (again as they have calculated) I will not bother cancelling at the end of the trial period.
They kinda suck now. I used to make 2 or 3 purchases per month, now I just go to Wal-Mart. I haven’t had an Amazon order since Oct. 14, 2013. It’s been 6 mos and I don’t even think of them anymore…I thought I would miss it.