Amazon Might Up Prime Fee by 50%

Share this article:
Free shipping carries a big corporate cost.
Free shipping carries a big corporate cost.

In an analyst conference call yesterday, Amazon's CFO said the company is considering increasing the member's fee for Amazon Prime by $20 to $40 to add cash to the company's spare bottom line, reported the New York Times.

Some 25 million customers currently pay $79 a year to belong to the loyalty program that promises free two-day delivery, streaming videos, and tax services. But Forrester retail analyst Sucharita Mulpuru estimates the company loses between $1 billion and $2 billion a year on the service.

Amazon is known for big revenue totals and measly profits. It reported just $274 million in net income on sales of $61 billion in 2013, and the company looks to add $500 million or more to its profits by hiking membership fees for Amazon Prime.

The fee hike is also needed to offset rising shipping costs. FedEx and UPS both raised rates by 5% recently, and the U.S. Postal Service's 6% rate increase took effect at the end of January. “Shipping costs have gone up a lot, fuel costs have gone up a lot,” said Amazon CFO Thomas J. Szkutak during the call.

Share this article:

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs:

More in E-commerce

Senators Try Back-Door Play to Gain Passage of the Marketplace Fairness Act

Senators Try Back-Door Play to Gain Passage of ...

Durbin and Enzi attach MFA to Internet Tax Freedom Act; Majority Leader Reid could introduce the combined bill on the Senate floor next week.

IBMer Takes Over at eBay Enterprise

IBMer Takes Over at eBay Enterprise

Craig Hayman directed SaaS solutions for e-commerce during his 15-year career at Big Blue.

Father's Day Mobile Sales Increase 37%

Father's Day Mobile Sales Increase 37%

iOS users lead the charge, spending $30 more per order than Android users. Pinterest tops Facebook for purchase influence.