Amazon recently announced that they would likely raise the price of their Prime Program anywhere from $20 to $40. This news got FBA sellers talking, because many of them feel that some of their best customers are Amazon Prime subscribers who take advantage of the program’s free shipping and quick delivery to replace part of their brick and mortar shopping.
A recent survey – with an admittedly small sample group of 300 – found that only 58% of Amazon Prime users would update their subscription if the price rose $20, and only 24% would renew if the price rose by $40 to $119. Amazon itself isn’t releasing any numbers about Prime Subscriptions or when the proposed rate increase will take place.
A large price increase could affect TaxJar’s FBA customers, so we decided to find out what the experts were saying. We caught up with some real sellers and friends of TaxJar to find out their take.
John Lawson, CEO of ColderICE Media and Author of Kick Ass Social Commerce for E-preneurs said, “I think the obvious concern is that the volume of sales may decrease based on the price hikes. But the question becomes…how many sales does a seller get via Prime?
Look, Amazon says Prime might go up between $20-$40 bucks. My thought is that if they stay below the $100 mark then the impact should be minimal. Either way though, for an FBA seller it should all be marginal impact at best.”
Bob Willey of SellerCoaching.com was equally sanguine, “I don’t think that the Prime price hike will matter much for most buyers/sellers. Especially if they phase this in like they talked about. A few people will grumble and complain, but the benefits so far outweigh the costs that it will not stop many people. It will be a minor stumbling hurdle.”
Kat Simpson of ThatKat.com, who has often written in the past about how buyers love Amazon Prime, addressed seller’s concerns:
“Amazon Prime customers are so in love with Prime that a fairly small price jump will not, in my opinion, make any significant difference in the numbers of people signing up every day. I see only continuing growth in the numbers of ‘Prime’ Amazon customers and a concurrent rise in FBA sales. Amazon FBA is still a wonderful opportunity for eCommerce Seller.”
Another take from the seller’s perspective: “While some customers may choose not to renew, the ones who stay will be even more avid Amazon customers,” says Cynthia Stine, author of Make Thousands on Amazon in 10 Hours a Week! “Amazon Prime is addictive and well worth the price. Prime buyers will be even better customers for FBA sellers.”
John Lawson worried on behalf of sellers, though, that the Prime price increase is taking away from bigger news:
“The real worry for any FBA seller is the cost of shipping going up, up, up Y-over-Y. Right now shipping is 4.7% of net sales for Amazon. That in my opinion is the gorilla in the room. Amazon runs on thin margins and as shipping eat up those margins, who will Amazon turn to make up the difference? Hmmm….”
At the end of the day, it’s important to remember that Amazon is a channel, with policies that can suddenly change and impact your bottom line.
We want to hear from FBA sellers out there? Do you think an Amazon Price increase will change the way you do business? Have you already taken steps in that direction? Please let us know in the comments.
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