The $99 Amazon Prime arrives, with questions in tow

The advantage of Amazon’s subscription service is the convenience of getting your products in two days. CNET takes a look at whether or not it's worth it.

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An Amazon fulfillment center. Oli Scarff/Getty Images

Amazon Prime's US members will have to swallow a $20 increase, starting Thursday, that will push their membership fees to $99 a year -- a price hike that raises questions about the real value of the two-day shipping program.

The assumption has been that in addition to predictable, two-day shipping, Prime customers end up saving money vs. non-Prime members, with the membership fees often compared to the fees customers pay to join warehouse clubs that offer bulk discounts. But CNET took a look at a number of products and found that isn't always the case.

In some instances, certain products under Prime actually cost more than their non-Prime counterpart, with the shipping fees baked in. For example, the PlayStation 4 Dualshock wireless controller costs $59.96 through Prime. A non-Prime seller had the same item listed for $52.32 with a $3.99 shipping cost, bringing the total to $56.22. The difference is only a few dollars, but that might be enough to sway price-sensitive shoppers.

"I spend fairly large amounts at Amazon but I was even starting to wonder if $79 was a reasonable price," one customer, citing the long-standing annual membership cost, wrote in an Amazon forum post about the fee increase. "I have noticed that a large number of Prime items seem to cost more already...This last year, more of the stores I encounter locally and online have lower prices."

Amazon Prime is an important part of the e-commerce heavyweight's plans for revenue growth on its retail side. Most of Amazon's products and services, from the Kindle Fire tablets to its video-streaming service, are designed to drive customers to Prime, which in turn is meant to spark a higher frequency of online shopping via Amazon. As a result, the company has had to be sensitive about raising the fees on the service.

New members had until March 30 to capture the original $79 price tag and any existing members who renew their memberships after Thursday will also pay the new fee. Amazon has automatic renewal for memberships, but you can check when renewal date is in your account settings.

The membership provides unlimited two-day shipping on 20 million Prime-eligible products as well as unlimited access to Prime video streaming and the Kindle e-book lending library. While Amazon says the hike will help cover rising transportation costs, it has also had the unintentional effect of causing some people to pause and reconsider the value of the service. But most members seem fixated on shipping and not the other perks.

"I set my iCal reminders for two weeks prior to expiration to 'END AMAZON PRIME MEMBERSHIP,'" a customer wrote in Amazon's customer forums. "This increase is a joke. Drone package deliveries, your own TV series, well, I don't want to pay for it. I buy mostly camera gear, and B&H has free shipping and great promotions without charging $99 a year. Thank you for waking me up."

Amazon: Prime's all about shipping, not pricing

Amazon, for its part, contends that the value of Prime shipping is on reliably knowing when a product will arrive at your doorstep. That is, the primary benefit isn't in price, but the two-day delivery.

"The comparison is only relevant if you include two-day shipping on both purchases because Prime is a shipping service, not a pricing program. Otherwise, you are comparing apples to oranges," Amazon spokeswoman Julie Law said.

Shoppers who don't pay for Prime can still get free standard shipping on Prime-eligible items, but they have to buy $35 worth of items, and it is delivered in five to eight days. Those who can't stomach the fee increase will just have to wait a bit longer for their goods to arrive.

Other products on Amazon are sold and shipped by third-party merchants on the Amazon Marketplace, a way to sell items that is similar to eBay. These sellers set their own prices, ones that Amazon says its tries to beat. But Amazon is not trying to hide that some non-Prime items are cheaper.

Law pointed to a Dirt Devil vacuum cleaner filter listing that includes this note: "This item may be available at a lower price from other sellers that are not eligible for Amazon Prime." That way, a customer can choose to purchase the other cheaper item instead.

"I know it's complex, that's why we try really to make it transparent as possible for the customers," Law said. Not all items that have cheaper counterparts have this note, though.

CNET did a few comparisons and found that while Prime products were more expensive in some of Amazon's top-selling categories, there were also some categories in which Prime products were the much cheaper options.

To do the comparisons, we checked the price of Prime-eligible products versus those non-Prime products that are also listed for sale. We used items from Amazon's top-selling products categories: toys, electronics, camera and photo, video games, books, and clothing. We also tested out household products because it's an area Amazon has been focusing on. Household items, like laundry detergent or toothpaste, require frequent replenishing and encourage repeat purchases.

To get a sampling, we picked five items from each category and made two separate shopping carts, Prime and non-Prime, with identical items. It's important to note that Amazon's prices are dynamic, and change so frequently that some of these items may actually cost less or more now, compared to when the comparisons were conducted.

What we found was the separate carts for toys and electronics were nearly identical. Amazon's non-Prime products had a very small advantage in these categories.

A "Frozen" Anna doll, for example, cost $23.99 through Prime. Through a third-party seller, the price was $17.99 plus $4.99 for shipping for a savings of $1.01. But delivery will take between three to five days, instead of Prime's two days.

When Prime did have the advantage, the savings were remarkable in some categories. It wasn't too much of a surprise to see that Amazon was able to price some books 22 percent less than non-Prime sellers. Amazon has dominated the book industry for a long time and is known for commanding cheap prices for that category. Almost every Prime book was priced lower than its counterpart. Even when books were priced higher through Prime, the shipping costs more than made up for the gap. John Green's "The Fault in Our Stars," for example, cost $10 through Prime, but was priced at $8.00 with $3.99 for shipping through another merchant.

It was difficult to do a true one-to-one comparison, as Amazon's spokeswoman noted, for all the items because most of the non-Prime items didn't have a 2-day shipping option. Many of these items had shipping windows of three to five days, or four to 14 days. Some were as long as 17 to 28 days.

One product that did have a two-day shipping counterpart was the Little Tikes TotSports T-Ball Set, a top-selling toy. The Amazon Prime item cost $13.49 while the non-Prime item was $14.99 plus $5.99 for the two-day shipping (this is not the example shown in the chart because it was done after the first comparisons).

There's also the argument that other retailers also have free shipping if you purchase a minimum amount. Competitor Walmart has the same prices for several of these items, including the T-ball set. The catch here is the shipping time. When bought with the Ticket to Ride board game, the T-ball set qualifies for free shipping that takes between four to 10 days. If you want the toys in two days, it would cost $18.94 on top of the $51.48.

This is a small sample of the products for sale so it's not definitive. Items of varying weight will have different shipping costs, and sellers will set a range of prices. But the examples illustrate the disparate range of prices and savings found on Amazon's site.

The mixed results suggest that while consumers aren't saving too much money, they are saving time. The question consumers have to ask themselves is whether paying $99 a year is worth avoiding the extra wait for purchases.

Below is a more detailed breakdown of the comparisons (the bundling of the following items is not meant to reflect a typical shopping cart, but to illustrate the pricing and shipping for a wide range of products):

Prime vs. Non-Prime

Item Prime Non-Prime Total difference Cheaper/More Expensive?
Toys
Little Tikes TotSports T-Ball Set $13.49 $14.78
Rainbow Loom $17.25 $15.49
TOMY Little Chirpers $12.24 $9.99
Frozen Anna doll $23.99 $17.99
Ticket to Ride $37.99 $27.93
(Estimated delivery time) 2 days 4 to 14 days
(Shipping costs) $20.18
Total (with tax added): $110.52 $110.13 $0.39 0.2 percent more expensive
Electronics
Chromecast $29.99 $29.98
Roku Streaming Stick $49 $49
Roku 3 (refurbished) $79.95 $74.49
Apple TV (Used - Like New) $84.99 $81.02
Kindle Fire HD 7" (Used - very good) $114.79 $104.60
(Range of estimated delivery time) 2 days 3 to 14 days
(Shipping costs) $20.96
Total (with tax added): $365.63 $360.05 $5.58 1.5 percent more expensive
Camera and Photo
GoPro Hero3 (refurbished) $378.93 $360
FujiFilm Instax Mini Instant $36.49 $36.95
CaseLogic Camera Case $10.99 $14.62
DropCam $199.99 $189.99
Neewer Collapsible light reflector $17.95 $12.46
(Range of estimated delivery time) 2 days 3 to 14 days
(Shipping costs) $17.22
Total (with tax added): $719.37 $635.85 $83.52 11.6 percent more expensive
Video Games
PlayStation 4 console $399 $425
PlayStation 4 Dual Shock wireless controller $58.94 $52.89
Xbox360 wireless controller $35.99 $33.99
Metal Gear Solid: The Legacy Collection $119.99 $94.98
Grand Theft Auto V $39.99 $34
(Range of estimated delivery time) 2 days 4 to 28 days
(Shipping costs) $15.96
Total (with tax added): $695.47 $656.82 $38.65 5.6 percent more expensive
Books (all hardcover)
Flash Boys $16.92 $14.74
The Opposite of Lonliness $15.12 $27.51
Frozen Little Golden Book $2.39 $0.97
The Fault in Our Stars $10 $8
Divergent Trilogy Box Set $31 $28.65
(Range of estimated delivery time) 2 days 4 to 26 days
(Shipping costs) $19.95
Total (with tax added): $79.84 $102.33 $22.49 22 percent cheaper
Clothing
Levi's Men's 501 Jeans $46.99 $44.99
Levi's Men's 505 Regular Fit Jeans $39.99 $39.99
Ray Ban Aviator Sunglasses $108.24 $104.91
U.S. Polo Association Men's Solid Polo $19.99 $35.99
Docker's Men's Khaki $36.99 $39.99
(Range of estimated delivery time) 2 days 3 to 5 days
(Shipping costs) $11.08
Total (with tax added): $264.80 $276.95 $12.15 4.4 percent cheaper
Household items
Gain laundry detergent (2 pack) $11.94 $30
Method hand wash (6 pack) $17.94 $20.69
Seventh Generation dish soap (6 pack) $17.76 $22.74
Crest Cinnamon flavor toothpaste (6 pack) $17.82 $21.24
ScotchBrite sponges (18 pack) $11.59 $14.99
(Range of estimated delivery time) 2 days 3 to 14 days
(Shipping costs) $34.54
Total (with tax added): $83.78 $144.20 $60.42 42 percent cheaper

Update, 10:16 a.m. PT: Updated chart to show that the totals include tax.

Update, 11:45 a.m. PT: Updated chart to show the estimated delivery window for each cart.

Corrections and clarifications, 5:49 p.m. PT: The deadline for new Prime customers to sign up was March 20 and existing Prime members cannot renew their memberships before their membership runs out. They can cancel Amazon's automatic renewal function, which can be done here. Standard shipping on Amazon (without Prime) takes five to eight days.

 

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