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Amazon Prime members buy twice as much, don't compare on price

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Re: Amazon Prime members buy twice as much, don't compare on price

#141

Post by toomuchtodo »

rdl wrote: post #21
Duff wrote: post #14

Earlier quoted context omitted.

Shipping is a tough business. You need lots of trucks, ramp space at airports, and lose the ability to cherry pick what states you operate in. Consider that despite billions in investments, both DHL before they went away and FedEx Ground today are still not as good as UPS.

FedEx Ground started as a different company (Roadway Package System) -- to this day, it has a lot of contracts, union rules, etc. which make it vastly worse than just a ground version of FedEx. The only FedEx acquisition which seems to be any good is Custom Critical (used for shipping organs, live animals, etc. on next-flight-out commercial service, to get stuff door to door as fast as possible).

Small quibble: You can also use Fedex Same Day service to get something on an airplane NOW at a much lower cost than custom critical.

Re: Amazon Prime members buy twice as much, don't compare on price

#142

Post by dman »

hyperbovine wrote: post #112
dman wrote: post #74

Earlier quoted context omitted.

As a small time seller I can fully attest to this. I hate selling on Amazon just about as much as I love buying on Amazon.

Then why sell?

Largely because there is no upfront marketing cost. Also while it has been inconvenient and frustrating at times I must admit that it is profitable.

Re: Amazon Prime members buy twice as much, don't compare on price

#144

Post by Jem »

My partner did the Amazon Prime trial last year and forgot to cancel it. He decided instead of contacting Amazon and sorting it out that we'd try it... we did about 95% of our Christmas shopping through Amazon which saved both time and money overall. It more than paid for itself & we plan on renewing this year. (The fact that we can both use the same Prime membership plan rocks my world!)

Interesting though - so many of you are talking about 2 day shipping... is that an American thing? Prime in the UK is next day delivery.

Re: Amazon Prime members buy twice as much, don't compare on price

#145

Post by silverlight »

jm4 wrote: post #45
daeken wrote: post #13

I've had Prime for almost a year and a half now, and I've spent well into the 5 figures on Amazon as a result. I'm not sure I've always saved money, but the fact that I can get damn near everything in no more than a day has just been great. I've bought desks, chairs, monitors, computers, etc and had them all the next day for $4. There's just no way to beat that, in my mind.

I bought a generator from them and got the free 2 day shipping. That thing was like 200lbs. A guy delivered it in an 18-wheeler and had to drive that thing through a little traffic circle in my neighborhood. I felt a little bad about that one. I've spent an obscene amount of money in the 3 years I've had prime. I've definitely saved money on the necessities, but it's easy to one-click the impulse stuff. The subscribe…

I did the same thing with a 200lb safe o_0. But we have a new baby and have also easily spent in the high 4 figures at least over the last year on baby gear and miscellaneous.

Re: Amazon Prime members buy twice as much, don't compare on price

#146

Post by polshaw »

beagle3 wrote: post #71
jrockway wrote: post #28

Earlier quoted context omitted.

Yeah, the article is very poorly written. What they meant to say was that Amazon invests $11 in each customer, and the result is a doubling of purchases. I am sure Amazon makes more than $11 out of every $900 in sales, which makes this a good deal for them.

The amazon profit margin is something like 3%, which some people consider unsustainable; 3% over the god-knows-how-many billions that flow through them is excellent business. The potential sustainability problem comes from having no margin for error or non-trivial change in structural costs. I don't know enough about it to have an opinion. Regardless, 3% of $400 == $12, so with these numbers, Amazon breaks even on a…

As a point of comparison, Tesco, one of the UK's largest companies, also has a 3% profit margin. They do take £1 in every 7 spent in the UK high street, so it obviously works quite nicely for them. So at volume, it is very sustainable.

Re: Amazon Prime members buy twice as much, don't compare on price

#147

Post by kahawe »

Lewisham wrote: post #10
ShabbyDoo wrote: post #3

"82% of Prime members buy on Amazon even if the item is less expensive somewhere else" The supposed "source" referenced another study (sans link), so I can't get the answer to the obvious question: Was "less expensive" computed using the marginal cost to the customer of this particular purchase? Meaning, do other sites offer the widget for a few dollars less but charge a lot for 2nd day shipping? I'm a Prime customer…

I think the other thing that's missing from this is that Amazon's customer service is really very good. I'll spend the extra dollars buying something from Amazon than, say, one of their third-party merchants, because I know Amazon will take care of me if anything bad happens.

Also, amazon offers you free return-shipping and no worries. Typically the 3rd party merchants here in Euroland are literally only a few bucks cheaper on a 3-digit purchase but they take (much) longer to ship, you have to pay for return-shipping and often you need to pay for shipping and handling as well. On top of that, they often go with the absolutely cheapest possible shipping option to squeeze out a few more bucks and that often fails delivering to a DHL Packstation (a popular fully automated self-service post box here), which is a major annoyance. I specifically order to my Packstation so I do _NOT_ have to deal with the horror and pathetic sight that is a German post office in the evening.

On top of that I am starting to really, really hate the amazon market place because their product offerings are horribly unorganized, they list in lots of wrong but popular categories and they put something up as a different product despite the same product already being there at least twice.

Also I absolutely love ordering online and getting stuff in the mail so I decided to pay the I-dont-know 20 bucks a year for the Amazon Prime subscription and get free next-day(!) delivery on each and every order. Why would I give that up and pay for the slower and worse alternative?

Re: Amazon Prime members buy twice as much, don't compare on price

#148

Post by kahawe »

leeoniya wrote: post #76
iamdave wrote: post #73

Earlier quoted context omitted.

Nightmare re: cost/inventory or both? I can kind of see how this works for merchants selling through Amazon. AMZN provides the customer with a good experience, makes customer feel valued, customer is more inclined to buy more products despite a bad moment knowing they'll be taken care of. Probably not how it pans out in practice, however.

the problem is, the customer is not always right. but your money and product is gone regardless...unless you're willing to jump through a ton of dispute hoops most of which take a long time and end up in favor of the customer on some obscure seller agreement clause. paypal does business this way as well.

In all fairness, if a few unfairly returned shoes are already almost figuratively putting you in the red, then you just might be in the wrong business or doing it wrong because online retail has clearly become this pond of a few HUGE fish who can easily afford to not care at all about returns - and customers love that and will keep coming back.

Re: Amazon Prime members buy twice as much, don't compare on price

#149

Post by JunkDNA »

thereallurch wrote: post #19

This is interesting. I am surprised that amazon spends only $55 extra a year on shipping per prime user. This past month alone I've received ~30 packages, all 2 day free shipping from amazon prime. This included some very large objects like a rowing machine, and some small items like a ream of paper. Last year I had a 3'x3'x2' next day aired for 4 dollars in time for Christmas. If I were to try shipping these items t…

Actual shipping costs (not shipping and handling which is what you often get charged by merchants) are pretty inexpensive when operating at the scale Amazon does. My family had a small factory so I got a good sense of what the shipping cost was vs. the handling. It was very inexpensive years ago befor oil prices went up, but I suspect there is still generous slop in the shipping charges for most merchants.

Re: Amazon Prime members buy twice as much, don't compare on price

#150

Post by mbrubeck »

EGreg wrote: post #131
mbrubeck wrote: post #83

Earlier quoted context omitted.

"Losing" was the wrong word there. They are spending $11 to acquire $500 of increased business. Even with a 3% profit margin, that's a net gain.

Where did you see the extra $500 ?

From the very first bullet point, on average Amazon prime members "increase their purchases on Amazon from $400 a year to $900 a year."
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