In case there was any doubt, the Seattle retailer has raised the minimum order size for free shipping for its regular customers by 40% to $49. In October 2013, Amazon boosted the threshold to $35 after holding the line at $25 for at least a decade.
It puts Amazon.com in line with its Quidsi division, which also requires a $49 minimum order for free shipping, as well as Wal-Mart Stores Inc.WMT +1.50%’s $50 threshold. Competitor Jet.com Inc. requires a $35 basket while Target Corp.TGT +0.21%’s is $25.
Amazon didn’t offer much of an explanation, saying in a statement that “from time to time, we review our shipping options.”
But the move highlights how much Amazon covets Prime members, customers who pay $99 a year in exchange for unlimited two-day shipping on many items, as well as a streaming movie and music service. By some estimates, Prime customers spend about double what non-members do over the course of a year.
The Prime fee alone could account for between $4 billion and nearly $6 billion in revenue annually, according to estimates in the range of 40 million to 60 million members. And being loyal, Prime members are important too because Amazon has to spend less to market to and retain them.
Amazon also is likely working to contain shipping costs that have ballooned in recent years. Those expenses jumped 37% to $4.17 billion in last year’s fourth quarter. As a percentage of sales, shipping costs rose to 12.5% in last year’s fourth quarter from 10.9% a year earlier.
The company lowered the free-shipping threshold for some book orders to $25, though it isn’t clear which books qualify.
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