Amazon Prime subscribers who don't need an item right away can now opt to delay the shipping time in exchange for a credit toward a video.
In the past, Prime members trying to purchase an item would see a few choices, such as free standard shipping, free two-day shipping, and one-day shipping at an extra cost. Now a new option has appeared: "Free No-Rush Shipping (5-7 business days)."
In return for waiting the extra few days, a Prime buyer gets a $1 credit good toward an Amazon Instant video. That means you can save a buck if you want to buy or rent an instant video that is not free for Prime subscribers. That may not sound like the greatest deal, but with many rentals going for $1.99 or $2.99, it shaves a bit off the price.
One of the major features of Amazon Prime is free two-day shipping on many products. So why would Amazon play around with such a key benefit? The likely culprit is shipping costs. In March, Amazon raised the annual price tag of its Prime subscription to $99 from $79. In explaining the price boost, the retailer said it had never raised prices on the service despite increased fuel and transportation costs. Shipping costs will continue to rise, and the company can't justify another price increase. So it is trying to find more palatable and flexible ways to trim expenses.
Amazon is also spending more money to enhance its Prime service overall. The company has moved more intently into original programming as a way to compete with Netflix. It also recently unveiled a new service called Amazon Music through which Prime members can stream and listen to more than 1 million songs.
The retail giant has been branching out with other products as well with the recent launch of its Fire TV and Fire Phone. A new service called Kindle Unlimited offers more than 600,000 Kindle e-books and thousands of Audible audiobooks as all-you-can-consume for $9.99 a month.
But the spending on all those new products and services appears to be taking their toll on the company's financials. Last Thursday, Amazon reported a second-quarter loss of $126 million, considerably deeper than the $7 million loss in the same quarter last year.
One strategy that the company hopes will pay off is integration among the various products and services. For example, Amazon is positioning its new phone not just as a smartphone but as an entry into its online shopping site through which Fire buyers will have easy access to its virtual shelves.