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just announced, not sure if it's been posted to B$ anywhere yet...basically you pay $79/year and you get free 2-day shipping on all your orders, and $3.99 overnight shipping, no minimum purchase requirements. sounds all right if you order a lot of stuff from amazon, not sure how they're making money on this (maybe hoping people sign up but don't order much?). as for me, I'll stick to free shipping on $25+ orders

The basic idea is two-fold. One, you allow people to get their merchandise faster for "free" (we can debate the semantics of being free with an annual fee tacked on later), which equates to buying it at a local store. Many people prefer instant gratification over cheaper prices. Go figure.

Second, you've locked the consumer into your store for a year, in the sense that if I'm comparing purchasing a product at Amazon versus other online stores and/or local stores, this feature is one that may swing my purchase towards Amazon, since other online stores' free shipping will take much longer, and getting it in two days is probably worth the hassle of driving down to local mega-mart to find it sold out, etc. You've also locked them in to your store in the sense that the consumer has paid for a service, they might as well take advantage of it.

Having said all of that, I wonder if the economics of the situation hold merit. They exclude enough items (no 60 inch HDTV delivered free thank you) and enough types of buyers (no resellers, etc.) to cover many possible abuses. I guess they expect more people to start taking advantage of 2 day shipping who used to not pay anything for free shipping. I would think that gets offset by all the people who order enough and pay for 2 day shipping that it saves them money to pay Amazon 79 bucks and get all that shipping free.

With no fillers to reach $25 necessary, they remove the cost of having to ship filler items separately when they don't have them at the same place as the major items (which was happening quite a bit.) That saves some money.

It may also signal the upcoming change of no more Free Super Saver Shipping. I predict six months to a year.

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Daniel

There is another THREAD in the IRD forum.

snarler,

You might just be right about the, at least partially, elimination of free super-saver shipping down the road.

Right now there is not much benefit in terms of cost since all 3rd-party vendors are excluded, ie. toys, and most merchandise cost more than $25 for which free super-saver shipping is available.

I doubt they'll cut the free super-saver. Competitors like buy.com offer it too, so they would be losing in comparison to them (not to mention Staples, OfficeMax, OfficeDepot, etc - lots of places offer free shipping). The free super-saver shipping over $25 has been one of the major things that drove Amazon to success in the past several years.

The interesting thing will be to see if they drop the price after a few months. Remember when super saver shipping dropped to $25 minimum and became useful?