Fintech & Ecommerce

Amazon Tests Higher Free Shipping Threshold

Amazon is currently testing a minimum purchase requirement of $35 to receive a free shipping service for customers who are not members of the Prime loyalty program.

Amazon Tests Higher Free Shipping Threshold

This decision of the e-commerce giant is due to the search for measures that can reduce the company’s costs and optimize its activities.

The previous version of Amazon’s corporate financial policy stipulated that the service for free delivery of goods is provided when the purchase amount is at least $25. The change in the commercial approach of the e-commerce giant will not affect Prime subscribers, who pay $139 annually for free delivery of purchased products and a number of other services.

Kristina Pressentin, an Amazon spokeswoman, confirmed that the company is currently testing a minimum tariff of $35 for consumers who are not Prime members. She noted that the e-commerce giant constantly evaluates its proposals and makes adjustments to them based on the results of the analysis. With a high degree of probability, this statement should be interpreted as a recognition of the fact that the company is studying the economic feasibility of its commercial solutions and, if necessary, decides to change the pricing policy to maintain an acceptable level of profitability.

Kristina Pressentin also says that Prime members still have access to the free delivery service for more than 300 million products. Separately, she noted that tens of millions of units of products are available for delivery on the same day or within one day.

Amazon CEO Andy Jassy is currently implementing a plan for a large-scale reassessment of the e-commerce giant’s expenses. The company is forced to adjust its tactics from the point of view of financial efficiency due to the slowdown in sales and uncertainty associated with the economic prospects of the e-commerce giant. As part of the relevant efforts, the firm has already laid off 27,000 employees, suspended corporate hiring, and canceled or temporarily curtailed the implementation of pilot projects. Also, acting within the logic of economic expediency, the e-commerce giant applied the practice of charging for the delivery of fresh food worth less than $150 and introduced a fee for some refunds in UPS stores.

A change in the company’s pricing policy can become a kind of catalyst for the expansion of its corporate community since adjustments made to Amazon’s commercial solutions could potentially cause some buyers to sign up for the Prime membership program, under which consumers are offered free two-day delivery, access to streaming services and other benefits. In 2021, the e-commerce giant reported 200 million Prime subscribers worldwide. In the second quarter of 2023, as a result of this program, the company made a profit of about $9.9 billion.

In 2016, Amazon raised the threshold for free delivery from $35 to $49, a year later this change was canceled and the indicator returned to its original value before further lowering it to $25 in order to be able to fully compete with Walmart.

As we have reported earlier, Amazon Launches In-House Shipping Service After Hiatus.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.