Title: Amazon Prime Was Too Good to Be True After All | WIRED
Headings: Amazon Prime Was Too Good to Be True After All
Amazon Prime Was Too Good to Be True After All
Amazon really has no choice but to raise the price of its "free" two-day shipping program. The irony is that Amazon Prime has worked out just like Amazon wanted it to.
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Content: But its $25.6 billion in fourth-quarter sales reported last week missed analyst expectations by about $400 million. Worse, sales aren't growing as fast as shareholders would like. After reporting its results Thursday, investors finally spanked Amazon shares with an 11 percent loss. 'Amazon Prime members who joined in the past year represent a different risk to Amazon.' Mike Levin
As late as June 2011, Amazon sales were doubling compared to the same time a year earlier. Compared to that kind of growth, any losses related to the too-good-to-be true Prime were easy to justify. Now sales growth stands at around 20 percent, and Prime has started to look like it's not holding up its end of the deal. Last year, we speculated that Amazon might even consider cutting the price of Prime because it was such an invaluable source of sales for Amazon. If that momentum is flagging, however, Amazon will have a much harder time justifying the shipping losses Prime inflicts. Along with bringing in more money to cut those losses, perhaps a Prime price increase would serve as a kind of litmus test.