Amazon is testing pricing for non-Prime members to get free shipping in selected areas, raising the threshold from $25 back to $35 – the same as for shoppers who aren’t members of Walmart+ – as it probes the potential to increase order value when shoppers add items to reach the magic number.
The company confirmed the test, which was first reported by EcommerceBytes.
“We continually evaluate our offerings and make adjustments based on those assessments,” Amazon spokesperson Kristina Pressentin told CNBC. “Prime members continue to enjoy free delivery on over 300 million items, with tens of millions of items available for free same or one-day delivery.”
Non-Prime members can continue to pay $9.99 per order for same-day shipping. The annual subscription fee sits at $139, with the last bump from $119 coming a year and a half ago.
Over the years, Amazon has yo-yoed the order threshold for non-Prime members to quality for free shipping as it reads the tea leaves of analytical data on shopper behavior and pulls the levers. In 2016, the minimum was increased from $35 to $49, then fell back to $35 again in 2017. Later that year, in a competitive move against Walmart, the minimum dropped to $25.
Prime membership dwarfs that of Walmart+, with an estimated 70% of consumers having access to it compared to 23% for Walmart’s program, as of October 2022, according to data from PYMTS. But Walmart has been growing steadily, reportedly stealing some share away among younger shoppers. Earlier this year, it gave away Walmart+ memberships to moms in a drafting move on Prime.
Scot Wingo, CEO and co-founder of Get Spiffy and a founder of ChannelAdvisor, said Amazon’s massive data science capabilities enabled it to strategically identify areas where there was less risk of losing business when the threshold jumped.
“It’s probably an intersection of the demographics of a ZIP code zip code pushing the cart economics up, forcing shoppers to either pay for shipping, get Prime or increase the cart,” Wingo said.
He said it’s very possible those same analytics tell Amazon places where it’s losing share to Walmart+. “I’m sure they can see in the data trends that a non-Prime user was ordering so much a month, then went to near zero,” Wingo said. “In that case, there’s a high probability they’ve joined a competing sub program.”
Josh Lowitz, a partner and co-founder of Consumer Intelligence Research Partners, is betting the change will have more of an impact on order size than Prime sign-ups. “Spending $10 more is relatively easy for non-Prime members, especially since presumably they have made a choice not to be members,” Lowitz said. “Of course, either change is desirable for Amazon.”