Amazon Raises Minimum Order Size as It Seeks More Prime Buyers

AmazonAn employee selects a branded cardboard box at the Amazon.co.uk. Marston Gate 'Fulfillment Center,' the U.K. site of Amazon.com Inc., in Ridgmont, U.K. Photographer: Chris Ratcliffe

Amazon.com Inc. is increasing the minimum order size for free shipping to $49 from $35, a step that could encourage more consumers to sign up for Prime, the online retailer’s annual service that includes two-day deliveries.

The benefit of getting more people to sign up for Prime services — for $99 a year — is that they tend to shop more frequently and spend more money, while access to other perks such as online movies, music and other content helps to keep customers within Amazon’s shopping ecosystem.

By encouraging non-Prime customers to spend more on a single order, Seattle-based Amazon is also aiming to reduce costs while boosting profits on each sale. The new threshold follows a 33 percent jump in fulfillment costs — warehousing, packaging and shipping — in the fourth quarter, which outpaced a 15 percent increase in product sales. Monday’s price increase is the first since 2013, when Amazon raised the threshold to $35 from $25.

Amazon’s new minimum order size for free shipping brings it in line with Wal-Mart Stores Inc.’s online store, which has a threshold of $50, or free pickup in stores. Target Corp. has a $25 minimum, while it’s $35 at startup Jet.com Inc.

As Amazon expands overseas and seeks ways to reduce the cost of fulfilling orders, it may be preparing to launch a global shipping and logistics operation that will compete with United Parcel Service Inc. and FedEx Corp.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

1 Comment on "Amazon Raises Minimum Order Size as It Seeks More Prime Buyers"

  1. that’s absolutely ridiculous. It’s not worth anymore to order from them. Others have much better offers, some company offer free shipping on any order. I’m sure they start loosing customers.

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