Try Quitting Amazon Prime. Bet You Can't

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www.amazon.com
Pop quiz time! Amazon Prime is like which of the following?
  1. The Eagles' "Hotel California," because you can check out anytime you want, but you can never leave.
  2. Flypaper.
  3. Black Flag's Roach Motel cockroach bait trap because folks check in, but they don't check out.
  4. All of the above.
The answer's obvious to anyone who has tried Amazon.com's (AMZN) loyalty shopping program where consumers pay $99 a year for unlimited two-day shipping of Amazon-warehoused merchandise, among other perks. Whether it's a supernatural hold or a mortal adhesive, once you sign up for Amazon Prime, you're pretty much happy to be stuck.

Amazon has never spelled out how many of its customers pay for Prime. All that we know is that it has "tens of millions," and a graph shown during last week's Fire smartphone media event showed that growth itself is accelerating at a freakish pace in recent years. Amazon has made Prime an indispensable service, and the leading online retailer has made it a success in a pretty ingenious way.

Plugging the Leaky Bucket

Before unveiling the e-tailer's first proprietary smartphone last week, Amazon founder and CEO Jeff Bezos talked up Amazon Prime. "You can fill a bucket with an eyedropper, if the bucket doesn't leak," he said before going on to explain that Amazon Prime is the bucket that doesn't leak. Without giving numbers, Bezos made it clear that once folks try Prime, they don't cancel.

It's the sticky nature of Prime that likely made Amazon comfortable in boosting the annual price from $79 to $99 earlier this year. Anymore, it's not just about the two-day shipping at no additional cost. While certainly that's important for a company that ships billions of boxes each year. Yes, billions.

However, in a neat twist, Amazon has made Prime sticky even for people who are starting to wean themselves off physical shipments. Prime also includes access to a growing catalog of streaming videos (40,000 titles), monthly Kindle e-book rentals (350,000 books) and with this month's debut of Prime Music, 1.2 million songs for streaming.

Digital Divide

Amazon is brilliant. It went from being the company that sold books, movies and CDs to one that offers all three of those categories in digital form at no additional cost beyond $99 a year.

It would make it easier to assess Prime if Amazon told us how many people are signed up. However, we still get a strong metric every quarter when Amazon updates the market on its overall financial performance.

Net sales climbed 22 percent to $74.45 billion last year, and analysts see sales climbing another 22 percent to $90.8 billion this year. You don't see retailers ringing up tens of billions in sales growing this quickly, but you don't have any other retailers of this size with a captive hold on tens of millions of shoppers with its sticky Prime program.

Once folks sign up for Prime, every shopping decision begins at Amazon.com. Now that Amazon is building up its digital ecosystem, it's also covered for the future in a way that most traditional retailers can only dream about.

Amazon has you exactly where it wants you in the Prime of its life.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Check out what Motley Fool analysts have to say about the next company that will revolutionize the way the world shops and interacts with its favorite brands every day in this new free report.


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101 Comments

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FRANK

Put incorrect card number on order correct no. is 378200550769004 EX. 03/18. Thank you.

July 03 2014 at 9:40 AM Report abuse rate up rate down Reply
espaingles

Why are you all up in arms over Amazon making money on their idea? It is really just a financial decision. No need to be angry at a company that comes up with a great moneymaker and it works for them.

I am a student so I pay the Prime fee that is about 50% off of regular Prime membership. This year I paid $39 plus tax. Next year it will be $49. So far I have 38 orders, why? because anytime I need something, especially if it's electronics I go roaming around several stores and everything is MORE than it is on Amazon. If I want to see the item in my hands for some reason I will go to a store and with my Amazon Kindle (it was a gift that I really am liking!) check Amazon's price and selection, and 90% or more of the time, they have a better deal. Why would I purchase at Best Buy or Fry's when they are overpriced and when driving around (in a large SUV no less) with the high price of gas in CA can cost me a good $5 - $8 going to just 2 stores. And please, those of you complaining about customer service when you buy a THIRD PARTY ITEM, that has NOTHING TO DO WITH PRIME, because third party sellers charge their own SHIPPING and their items are not PRIME eligible 99% of the time (there are some exceptions when Amazon partners with a seller to let their items go under Prime eligibility). So, if I paid $39 for Prime and have now, at 4 months purchased 38 items, turns out to about $1.02 per shipment. If I paid the $3.99 minimum without Prime, it would be over $150 in shipping fees. Most of the time I need the items sooner than the standard shipping, which when I used free shipping by buying $25 or more, has a shipping time that’s too variable for me. Plus I had to keep items in my cart until I had $25 of items ($35 now). If I finish the year with 50 orders, I'll pay $.78 per order, if 75 orders, $.52 per order. Without Prime I 'd pay $200 for 50 orders and $300 for 75 orders. When I no longer have student Prime eligibility, it will still make cents to choose Prime for our family. If you only buy one or two items here and there obviously it's not for you. This does not include the fact that I have watched MANY movies and listened to tons of music through the Prime streaming program.

As far as Customer Service, I have had excellent response. As soon as I had a problem they immediately sent me a return shipping label and they shipped a new item, on one occasion refunded me. Store: long lines, crabby customer service. time, gas, and what? What's a receipt?

Amazon Sellers have also been great. I purchase mostly ink cartridges from third party sellers and works great for me.

Amazon has worked great for my family and I, and sorry for all you haters of a good idea, or capitalism at work, Mr. Munarriz is that you?, it's a simple dollars and cents decision.

If it's worth it, you buy Prime, if it’s not, you don't. Unless Amazon commits some illegal or immoral act in its dealings I choose the Hotel California, I love the Eagles anyway.

June 27 2014 at 9:51 PM Report abuse -2 rate up rate down Reply
rooroo1

I love Amazon! I have no problem paying the fee. A little miffed when they rised the price, but I will keep my subscription. I do at least 80% of my shopping online so I can compare prices and be sure that something I need is in stock (nothing like going from store to store looking for something just for them not to have it!) and of that 80%, I would say 90% of that is from Amazon. I like the fact that I can buy a $5 item that my local store probably doesn't have and I don't have to pay $6 for shipping or try to come up with more items to add to my order to reach the $ amount for free shipping.

June 27 2014 at 4:36 PM Report abuse rate up rate down Reply
wrccrc4

I do not use prime because they only let you order but one book per month. If they ever change that policy I will be first in line to sign up.

June 27 2014 at 3:06 PM Report abuse rate up rate down Reply
jwatergirl1

Amazon censors reviews and canceled my seller feedback and reviews over six times. I won't trust any reviews ever again. Add to that they made me ship defective item back to CHINA...It would have cost more than item's price. I was already disgusted by their political contributions so goodbye Amazon.

June 27 2014 at 3:39 AM Report abuse rate up rate down Reply
wlftax

I bet I can quit Amazon now that they have decided to let the great USPS deliver my purchases and I'm still paying $99 a year for the Prime service. Oh yes I can quit them. All of the expense of Prime and all of the terrible service of the USPS.

June 27 2014 at 2:34 AM Report abuse -1 rate up rate down Reply
tc

Amazon saves me money, saves me time.

June 27 2014 at 1:29 AM Report abuse +1 rate up rate down Reply
1 reply to tc's comment
donna

agreed. i'm lazy and would rather have my stuff on my front porch than go shopping. prices are good. shopping in a real store is worse than a root canal!!

June 27 2014 at 1:43 AM Report abuse +1 rate up rate down Reply
Duncan

Prime is great...best is no shipping charge and second is the 2 day delivery... Town is 45 miles so it is better than driving into town. I have done a lot of browsing for the right price and nobody beats Amazon and Prime makes the decision easy. One does have to pay attention since not everything on Amazon is Prime.

June 27 2014 at 12:40 AM Report abuse +1 rate up rate down Reply
major.lackland

Sounds like AOL years ago when they charged for their service. So a person had to try to get TOSed.

June 27 2014 at 12:06 AM Report abuse -2 rate up rate down Reply
dfoster

I like Amazon, but cancelled the Prime membership. Too costly. Unless I can scrape up a purchase of $35 or more of items qualifying for free shipping, I buy elsewhere. Amazon is a bit of a novelty, but not much else.

June 26 2014 at 11:59 PM Report abuse -2 rate up rate down Reply