Amazon shoppers in the US need to shell out more money to escape shipping charges.
Customers will now have to buy at least $49 worth of goods, up from $35, to qualify for free shipping. For those making book purchases, the freebie kicks in at $25.
A new Help page posted by Amazon explains the new free-shipping process. With free shipping, orders are delivered within five to eight business days.
The jump in the minimum amount for shipping applies only to shoppers who don't subscribe to Amazon's Prime service. Amazon last upped the minimum price for free shipping in 2013 from $25 to $35.
Amazon Prime, which offers free two-day shipping, has helped the company grow faster than the broader e-commerce market, but it's also added to shipping costs and fulfillment costs, whose growth has been outpacing that of revenue. Amazon remains a top online retailer but still must contend with competition from brick-and-mortar stores such as Walmart, Target, Best Buy, Costco and Sam's Club.
By jacking up the minimum amount for free shipping, Amazon is hoping people will order more items per purchase or forgo the free shipping. But the move may also convince more consumers to try Amazon Prime.
For $99 a year, subscribers receive not just free two-day shipping on most products but also access to a large selection of streaming movies and TV shows, unlimited music streaming with Prime Music and unlimited photo storage with Prime Photos.
Prime has been a success story for Amazon. The company has been tight-lipped about the number of Prime subscribers. But a survey conducted last quarter by research firm CIRP estimated that 47 percent of Amazon customers are Prime members, which adds up to around 54 million subscribers. The trick for Amazon is to figure out how to attract and retain Prime members without being hit by the high associated costs of free two-day shipping.
The company does offer Prime members a $1 credit for future e-book or digital video purchases when they choose five-day shipping instead of two days. Under its "add-on" program, Amazon ships thousands of low-priced items only when they're included as part of a $25 order. In March 2014, the company increased the annual price of a Prime subscription to $99 from $79 to help pay for higher transportation costs. But another price increase at this point would be a risky move.
The company has adopted other strategies to rein in shipping and transportation costs. It offers a network of storage lockers in the US and the UK where people can pick up their orders, and it's looking to expand that approach to Europe, Reuters said Monday. Last month, the company rolled out a convoy of new trucks to help ship inventory.
Amazon has also been testing drones as one way to deliver goods to warehouses and eventually to customers' homes.