Amazon Prime is the online paid subscription service offered by Amazon.com web-commerce site (Source: Getty Royalty-Free)
I’ve always thought Amazon went out of its way to take good care of its Prime members. But when Amazon announced it is giving everyone free 2-day shipping for the holidays, I cannot help but feel that I, along with all Prime members, should not have to pay to get the same benefit. I called Amazon to talk about this and didn’t get the response I was expecting. If you are a Prime member, I’d love to know what you think. Here’s how the conversation went.
Ken Kam: Hello, I have a question about my Prime membership.
Amazon Representative: Thank you for being a Prime member. How can I help you?
Kam: I see that Amazon is giving free 2-day shipping to everyone for the holiday season. Since this is the main benefit of Prime membership that I actually use, I don’t want to keep paying for this benefit when everyone else is getting it for free.
Can I put my Prime membership on hold during the holidays so I’m not paying for the two months when everyone gets free 2-day shipping?
Amazon: That’s a good question. Let me put you on a brief hold while I research your options?
later
Here’s what I found out. You paid for an annual membership in April. We can cancel your Prime membership and put you on a monthly plan. Then you can cancel the monthly plan and start it up again after the holidays.
Kam: Will I get a refund for the unused 5 months of my annual membership? I paid $119 for 12 months, so I figure 5 months worth is about $50.
Amazon: We don’t give pro-rated refunds for services that you’ve already started to use.
Kam: If you’re going to keep the $50, how does your solution address my issue about not wanting to pay for Prime when everyone is getting the main benefit I care about for free?
Amazon: That is what I am authorized to do for you.
Kam: OK, thank you.
My Take: In May of 2016, when Amazon was at $700, one of my managers, Rex Jacobsen, bought it because he thought the market was underestimating the company. A little more than two years later Amazon is north of $1,600.
Amazon Prime is one of the initiatives Rex expected would drive Amazon’s value up. Boy was he right. In April, Jeff Bezos said that Amazon Prime had over 100 million subscribers worldwide. With an annual subscription now running $119, Prime membership fees generate north of $10 billion a year of high margin revenue.
As successful as Amazon has been, investors have to be alert to changes that signal weakness. The change in how Amazon takes care of Prime members is a good example.
When I first became a Prime member, free 2-day shipping with no minimum order amount was the only benefit. Amazon has since increased the annual price from $79 to $119 while adding new benefits. While I’ve not used the new benefits, I’ve paid the higher price anyway because the original 2-day shipping benefit was worth it.
Making Prime members pay for the benefit of free 2-day shipping when everyone else gets it for free is the opposite of taking care of us.
If Amazon is going to offer 2-day shipping free to everyone, then give it free to Prime members as well. To make things right, either give us a partial refund, or extend our Prime membership for a couple of months.
We are not talking about a lot of money here. At $119 a year, two months of Prime membership costs about $20. Still, if I pay Amazon $20 I’d like to get something I value in return.
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