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Thread: How does Amazon not lose money on Prime shipping?

  1. #1
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    How does Amazon not lose money on Prime shipping?

    I ordered a new RV cover from Amazon on Wednesday. I signed up for a free 30 day trial of Prime. Originally I was given a delivery date of Monday. Amazon didn't ship the item until Friday. They used Fedex Priority overnight with Saturday delivery so I am getting the RV cover today. The non-discounted rate from Fedex for such a delivery would be $328. Amazon certainly gets a substantial discount, but they still paid a lot for shipping. How do they not lose money on prime shipping with cases like this?

    I'm really happy to be getting the cover today instead of Monday. We are supposed to get a substantial snowfall on Monday. The old cover got destroyed because I hadn't noticed two of the straps holding it down broke.

  2. #2
    I don't know how they do it either. I ordered something for $5 with prime, and it came UPS ground, got it in 2 days. On our business account, there's no combination I can use to get $5 for shipping anything to anywhere. When I signed up for Prime, I did it reluctantly. I thought $99 for that? So I did the free trial and started to see the benefits. After having it for 3-4 months now, I guess, I can't say enough great things about it. It's saved way more than the $99 it cost, in shipping costs alone.

    I was skeptical, now I'm a believer.
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  3. #3
    A really cool thing with Prime is you can often get items delivered next day for $5-$10

    But yeah, the $99 doesn't even cover the cost of all the boxes they ship to our house. I throw 2-3 Amazon boxes a week into our recycling bin.
    Gerry

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  4. #4
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    I imagine they have some kind of deal with the shippers, and the majority of members don't buy much.

  5. #5
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    Remember - you are not getting free shipping when you pay for Prime. You already get free shipping in most cases. You are paying $99 just to get your stuff in 2 days rather than 3 - 10 days. I'm just not in that big of a hurry, usually. I have had free 30 day trials on two occasions and I didn't consider it worth continuing either time. The streaming video and music services are not as good as the other alternatives.

    Prime is kind of like going to a jewelry store and finding a 3 carat diamond ring marked down to half price. It may be a good buy for some people but not for me.

    Edit: Part of the answer to the original question is that many people don't use premium shipping enough to offset the $99 in a single year and some just sign up on a whim and then never use it again. You can bet they are coming out ahead on the deal.
    Last edited by Art Mann; 11-28-2015 at 10:46 AM.

  6. #6
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    Even if Amazon gets a 75% discount they still spent around $80 for delivery. Amazon's price was lower than anybody else so they aren't making up for the shipping with a higher price. Fedex charges surprisingly little for Saturday delivery. The retail price drops from $328 to $316 if you want it delivered Monday instead of Saturday. (To clarify, the retail price for Fedex shipping drops, not Amazon's price.)
    Last edited by Brian Elfert; 11-28-2015 at 11:57 AM.

  7. #7
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    Quote Originally Posted by Art Mann View Post
    Remember - you are not getting free shipping when you pay for Prime. You already get free shipping in most cases. You are paying $99 just to get your stuff in 2 days rather than 3 - 10 days. I'm just not in that big of a hurry, usually. I have had free 30 day trials on two occasions and I didn't consider it worth continuing either time. The streaming video and music services are not as good as the other alternatives.
    I signed up for a 30 day free trial of Prime so I didn't pay anything extra for the two day shipping. I already went into my account and changed it so I won't be charged for a Prime membership when my trial expired. I don't order enough from Amazon to pay for Prime. This is my first Amazon order in more than a year.

    I have had some many Prime trials over the years I can't keep track. There used to be a way you could sign up for a three month trial of Prime over and over again, but Amazon closed that loophole about two years ago. (They now look at billing and shipping addresses to see if an address has recently had a Prime trial.)

  8. #8
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    A lot of shippers give some really big discounts to really big customers like Amazon or large corporations that do a high volume business with them. Since they fly those routes daily, the shipping company makes money on the shipped volume rather than by the item as they do for individuals like you or me.

    BTW....I buy a lot from Amazon, am a Prime member and have been greatly satisfied I am getting my money's worth! My biggest complaint is I mistakenly showed my wife how to use it. She is the penny pincher in the family and she could not understand Amazon made money on the free 2 day shipping. Now she uses my Prime account regularly.
    Last edited by Ken Fitzgerald; 11-28-2015 at 11:30 AM.
    Ken

    So much to learn, so little time.....

  9. #9
    I've been a Prime member for a few years and it's been well worth the price. Shipping costs have often discouraged me from buying something. I was looking for some balsa wood the other day. The price for the wood was about $18. They wanted another $14 for shipping. I found some balsa planks on Amazon for about the same price but they were a bit thicker than I wanted. Two days later I got it and saved $14 in shipping.
    “Travel is fatal to prejudice, bigotry, and narrow-mindedness..." - Mark Twain

  10. #10
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    I'm not usually in a hurry, so use the free shipping.
    Although I have had items shipped from China that got here in 3 days. Usually small electronic items that come from there anyway.
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  11. #11
    Quote Originally Posted by Art Mann View Post
    Part of the answer to the original question is that many people don't use premium shipping enough to offset the $99 in a single year and some just sign up on a whim and then never use it again. You can bet they are coming out ahead on the deal.
    +1 Art. Jeff Bezos is a smart man and hires smart folks to run his company. They make money.

  12. #12
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    I was an Amazon customer before they were even a public company. I've been a Prime customer since it began. I have an Amazon visa card and I routinely get $125 every month in cash back. Amazon makes money, just not very much money. I believe the last quarter they made $175 million. To put that into perspective, Apple nets that amount every 2 or 3 days.

  13. #13
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    Quote Originally Posted by Kent Adams View Post
    I was an Amazon customer before they were even a public company. I've been a Prime customer since it began. I have an Amazon visa card and I routinely get $125 every month in cash back. Amazon makes money, just not very much money. I believe the last quarter they made $175 million. To put that into perspective, Apple nets that amount every 2 or 3 days.
    If you were to look at the whole Amazon picture over the years, you would see that the reason Amazon isn't making much money is because they reinvest their income into infrastructue at a huge rate every year worldwide. They could make boat loads of money at any time.
    Jason

    "Don't get stuck on stupid." --Lt. Gen. Russel Honore


  14. #14
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    I never seen the need for Prime myself. Shipping is free anyway over $35 and if it is in stock at Amazon next state over I get it less than a week most of the time. Sometimes in 2 to 3 days.
    Last edited by Dave Lehnert; 11-28-2015 at 9:40 PM.
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  15. #15
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    I doubt our family orders enough to get our money's worth on Prime. Certainly if Amazon gets a big discount on shipping, it is making money off our membership. I bet there are a lot like us. Having the membership does make me more likely to order from Amazon than someone else, which should be to Amazon's benefit.

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