I have some great home tech content in development, but I wanted to discuss how many of us acquire home tech- Amazon Prime. A lot of people tell me how much they love Amazon Prime. They pay a fixed annual price, and receive two day shipping on most items. Considering two day shipping is at least $10 or more, it does not take a lot of purchases to make this a (perceived) steal.
That was the original Prime, but enough people did not consider it a steal, so they added additional amenities (and raised the price). The new Prime includes commercial-free Internet radio, unlimited video streaming, and access to a Kindle library.
Too good to be true? Well it is true, but not so good. it’s a bad deal and I recommend skipping it.
1. It Is Not Free Shipping
Ask most people why they have Prime, and the answer is “because I like the free shipping.” It isn’t free! In addition to the annual fee, Prime eligible items are more expensive. You effectively pay for shipping twice. Even at Amazon when the same item is available from different sellers, the Prime eligible one is always more.
By the way, what are these “add-on items?” According to Amazon: “The Add-on program allows Amazon to offer thousands of low-priced items that would be cost-prohibitive to ship on their own.” So much for free shipping. The add-on items are like life without Prime - buy enough and shipping is free (see item 2). They could at least offer add-on items via Priority mail for no additional charge.
2. Corollary to Not Free:
Almost any item that qualifies for free shipping under Prime also qualifies for free shipping in general. Amazon recently raised the free-shipping threshold from $25 to $35, so I just queue stuff in my cart until I hit free shipping. if I can’t wait, I just go get it in town (not too often -see 3). The problem is Amazon so desperately wants to sell Prime that they make life difficult for non-Prime customers. They can easily take a week just to ship a free order. They think this encourages Prime, but bad service is a bad strategy to increased loyalty - I'm proof.
3. I Can Wait
Many people consider the biggest frustration of online shopping to be the wait time. I figure, if I can’t wait I should go buy it while the local stores still exist. I order stuff online, and forget about it. Sometimes, so much so that when it arrives, I can’t even guess what’s inside the box. We are all programmed to be want instant gratification, but really in most cases it can wait.
3. Not Green
When you buy something at Amazon, it gets picked off a shelf, packed in a box, and shipped via trunks and planes to the doorstep. It’s impressive, but it’s a bit silly if the same item is already nearby. Especially because retail items likely got nearby far more efficiently - via truck and train and packed in large quantities. Shipping and transportation is more efficient when in quantity and when transported on the earth’s surface.
WSJ Reports in: The Gilded Age of Free Online Shipping: Enjoy It While It Lasts
“The rise of free or cheap shipping offered by online retailers has led to a form of logistical gluttony, where express shipping services like FedEx and UPS are being used to deliver packs of toilet paper to a customer’s door...But it all seems a little bit excessive: Having a tube of toothpaste whisked by plane and truck to your door has a very Gilded Age feeling to it, even if you’re not paying much for the privilege.”
I had Prime years ago. I needed new wipers for my truck and opted to order them online. Truck wipers are long, so required a large box, in fact two boxes as they were inexplicably shipped separately. Each box was filled with paper and a single wiper shipped cross country, two-day-Air to my truck. Yes, it was good for me, but at a ridiculous and selfish social cost.
4. Pay to Play
I walk out on bad movies. Some of my friends say they feel obligated to get their money's worth. I figure if I stay, I’m actually paying twice. We normally associate admission fees with entertainment, but it is also a gimmick to get people to buy. This is a common practice at traveling liquidator events and swap meets. If you paid to get in, leaving empty handed makes the admission charge a waste of money, so the quick remedy is to buy something- anything. Prime is a similar hook - it’s a commitment to shop at Amazon. The biggest online retailer should not use such gimmicks.
I respect loyalty, but it should be earned. It’s bad enough when loyalty gets bought. In this case we pay Amazon and give them our loyalty. If you have Prime, you are not going to buy stuff at competitors, even if it’s cheaper. There are many great alternatives to Amazon (Walmart.com, NewEgg, Netflix, Best Buy, and countless other small sites, etc.) and the world is a better place with competition. Furthermore, Prime only works with items that Amazon ships, so Amazon uses Prime as incentive to suppliers to pay Amazon to warehouse items. Prime stifles competition all the way up the supply chain.
By the way, Newegg launched its own version of Prime. Newegg Premier costs $49.99 per year and offers unlimited free shipping. Packages are guaranteed to arrive in three days or less with the service, and faster shipping options are discounted. I don’t want NewEgg’s service for the same reasons I don’t want Prime. However, it is noteworthy that the smaller competitor can offer a similar service for about half the price. Also, I'm sure that Amazon gets a far bigger shipping discount from UPS and and FedEx than Newegg does.
I was going to stop at 5 because it's a prime number, but I don't value prime...
6. It’s About Shipping
I hear over and over that the additional services (video, radio, and Kindle library) make it a "no brainer." That’s because services like Netflix, Pandora, and Amazon’s Kindle Unlimited service added up separately approach the cost of Prime by themselves - the shipping is almost free. The problem is these services are not very desirable services - likely services you would never subscribe to separately. Most consider Netflix to be a superior service, and It’s pretty rare to find a Kindle book that is 1) in the library 2) finish-able in the time allotted.
This reminds me of those late night paid programming shows - they always follow a pattern of setting up the product at one expectation and then suddenly offer double for the same price if you act quickly. The psychology is we can’t pass up a great deal, even if it is two items instead of one that we never wanted.
On a final note, take notice how badly Amazon wants customers to have Prime. I’ve accidentally Prime bought when I rushed through a checkout. Amazon pushes Prime harder than Burger King pushes fries. People think Prime is a great deal.... and it is for Amazon.