Amazon have upped the minimum order value to qualify for free postage in the US. Since 2013 the minimum order value on Amazon.com for free shipping was $35 but that’s been quietly raised with no announcement to $49 (It remains at $25 for books).
We saw a similar hike in minimum order value on Amazon.co.uk back in 2015 when the threshold doubled from £10 to £20.
Amazon have multiple reasons for raising minimum order values. It means more consumers will either pay for shipping or spend more, either behaviour reducing Amazon’s total shipping costs as a ratio of total sales. It’s also a greater inducement for consumers to sign up for Amazon Prime in order to access free shipping. This doesn’t reduce Amazon’s burgeoning shipping costs but it’s a well known fact that Amazon Prime customers spend more than non-Prime users.
For retailers who sell sub $45 products on Amazon it makes Fulfilment by Amazon (FBA) somewhat less attractive. Whilst there are costs associated with FBA it gives access to the pool of Prime customers who will then still get free shipping. FBA also tends to make it easier to win the Amazon Buy Box, further increasing sales. However you may self fulfil and offer free shipping even if your item is below $45.
The alternative to self-fulfilling low value items is that customers may simply stop buying your products or wait until they wish to purchase additional items to qualify for free shipping.
It’s been 10 months since Amazon raised the free shipping order value in the UK. How did it affect your business and have you any advice for Amazon.com sellers from your own experience?
One Response
Another attempt by Amazon to increase Prime membership and make FBA more attractive to sellers.
I suspect some smart sellers out there will be testing their prices to see if they can raise them to $49 or $25 for books with the aim of maintaining sales and Buy Box ownership but increasing overall profitability.