News Byte: Amazon Ups 'Prime' Rate

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Amazon Prime rate goes up by $20.
Amazon Prime rate goes up by $20.

Amazon today increased the annual membership fee for its Prime service by 25% to $99, a move it had telegraphed during its quarterly conference call in January.

The popular program, which offers free two-day shipping on all orders and unlimited streaming videos, was a loss leader for the company at $79, with Forrester analyst Sucharita Mulpuru estimating negative results of up to $2 billion a year. Amazon will look to bulk up its slim profits with the hike. It reported just $274 million in net income on sales of $61 billion in 2013.

“The cost of home delivery is causing mounting anxiety in the retail sector," commented Natalie Berg, global research director of Planet Retail, in the wake of the Amazon announcement. "Many retailers will find themselves unable to cope with the financial burden of home delivery services. Fulfilment is set to be the next major battleground in retail and the casualties may be heavy.”

Amazon customers were apprised of the change today with a display ad on the retailer's home page offering a year of Prime discounted at the old rate of $79 instead of the newly established $99. Customers have a week to take advantage of the deal.

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