Amazon pushing free two-day shipping offer in US
Ecommerce giant Amazon is pushing the free shipping service within its “Prime” membership programme in the United States. The company said this week that for the first time ever, it now offers the free two-day shipping service, available for members paying the $79-a-year fee, for more products than it does its standard five-to-eight-day free shipping service for non-members.
Seattle-based Amazon launched its Prime membership programme back in 2005, offering members free two-day shipping on a million different products.
Now the service has grown to include 15m different products, more than its Free Super Saver Shipping service, offered since 2002.
Jeff Bezos, founder and CEO of Amazon, said his company had focussed on expanding its product selection since starting up in 1995.
“Following the introduction of Amazon Prime in 2005, we’ve worked hard to grow Prime selection as well,” he said. “We’re incredibly proud to be able to offer more than 15m Prime items today.”
The top two items currently being purchased on the Prime free shipping service are two versions of Amazon’s digital books reader, the Kindle.
Prime
Amazon’s sales are growing 29% year-on-year at the moment, led by a 36% year-on-year growth in the United States. However, the company has almost wiped out its profitability by making significant investments in its long-term growth, including moves to decentralise its supply chain system.
According to the company’s 2011 annual report, last year Amazon spent close to $4bn on shipping, charging its customers $1.55bn during the year for shipping.
The company has actually been absorbing more shipping costs each year over the past few years as its encourages customers to use its Prime service and other shipping discounts, with its net shipping cost increasing from 3.5% of net sales in 2009 to 5.1% in 2011.
“We seek to mitigate costs of shipping over time in part through achieving higher sales volumes,” the company revealed in the report released in April.
“We believe that offering low prices to our customers is fundamental to our future success, and one way we offer lower prices is through shipping offers.”
