Nearly six months after doing so in the U.S., Amazon said it is increasing the cost of its Prime subscription program in the UK and Western Europe by up to 43%, as it too battles inflationary pressures and higher operating costs.
According to Reuters, German Prime members will see a 30% increase in the annual fee, while in the UK it will go up 20%; they are the company’s second- and third-largest markets after the U.S. In Spain, Italy and France, Prime members will see the annual cost rise between 39% and 43%. All the increases will take effect Sept. 15.
In addition to inflation and operating costs, Amazon cited faster delivery and more streaming content in justifying the European price increases, which like the U.S. had not taken place since 2018. “We will keep working to ensure Prime offers exceptional value for members,” the company told Reuters.
In May, Amazon reported a $3.8 billion loss for the first quarter, its first dose of red ink since 2015. CFO Brian Olsavsky told analysts external inflationary pressure on things like shipping, fuel and labor, partly due to COVID-19 issues in China and the war in Ukraine, contributed $2 billion in incremental costs in the quarter.
Another $2 billion in incremental costs came from Q4 overstaffing as the workforce initially dwindled due to Omicron infections, then surged as they returned, while inflation dampened sales, Olsavsky said. Analysts are calling for $1.38 billion in net income when Amazon reports its Q2 results on Thursday.
In more positive news, Amazon announced last week that electric vans from Rivian Automotive are now being used to deliver packages in Baltimore, Chicago, Dallas, Kansas City, Nashville, Phoenix, San Diego, Seattle and St. Louis, among other cities. The rollout will include 100 cities by year end, with a projected fleet of 100,000 EVs by 2030.
A pretax loss of $7.8 billion on Amazon’s investment in Rivian was a major contributor to the Q1 loss, the company said.