May 18, 2018
In late April, Amazon announced that it was hiking the price of an annual Prime membership from $99 to $119. Now comes word that the $20 increase could lose the program more than half of its membership, based on findings of a poll of 1,000 current users conducted by Atherton Research , Forbes reported on May 9.
In fact, fully 59% of Prime members said they would not renew when their current pricing expired. The program offers discounted package delivery, access to movies and TV shows, ad-free music, photo storage, Kindle books, and grocery drop-off services.
To date, Amazon says, it has reaped a record $51 billion in sales and $1.6 billion in net profits from more than 100 million Prime members worldwide.
CFO Brian Olsavsky disclosed the price increase on an earnings call, saying it would take effect on May 11 for new members and affect Prime membership renewals after June 16. “We still feel it’s the best deal in retail,” Olsavsky told an analyst
And the analysts tend to agree: “You’re not gonna see any Mad Max-style boycotts, that’s for sure,” Eric Schiffer, chairman of Reputation Management Consultants, told Business Insider for a recent story. “People love Prime, and they already feel like they’re in the money by hundreds of dollars because of the savings, so no one feels bashed in the teeth.”
Prime has created an “emotional relationship” between Amazon and its customers, Schiffer added, which, he said, makes them feel like they’re part of an elite club.
But that relationship could be a problem if members start to feel that Amazon is not fulfilling their end of the bargain for whatever reason. Business Insider recently reported that some Prime members have become dissatisfied by the frequency with which their packages are arriving late.
“Trust is still the bedrock,” Schiffer said. “You can have an emotional connection, and then feel betrayed, and that emotional connection will get severed pretty fast.”
Research contact: @DennisVerde