Amazon raises prices by more than 16%! Will the new price adjustment cause turmoil on the consumer side?

Amazon will officially raise Prime membership fees starting on February 18th, local time in the United States. The annual price will increase from US$119 to US$139, an increase of more than 16%. The monthly fee will also increase from US$12.99 to US$14.99!

This is the first price increase for Prime membership in four years. After launching the Prime membership service in 2005, Amazon has maintained a pace of increasing the price by $20 each time, from $79 a year to $139. Every membership price increase is accompanied by a very strong consumer reaction. Now the number of registered Prime users has exceeded 200 million. These fans are very sensitive to membership prices, and many fans will "unfollow" every time the price increases.

The reason Amazon gave for the price increase was the labor shortage in logistics and overall inflationary pressure in the United States. In order to maintain the fast delivery service enjoyed by Prime members, Amazon needs to maintain higher costs to provide transfusions to the FBA system. This price increase is to solve the higher investment faced by Amazon in various aspects, from transportation to labor to construction.

As for consumers, they have to consider whether the extra $20 is worth it. There has been a wave of "cancelling your Prime membership" on the Internet. Under this trend, most consumers believe that they shop less frequently on Amazon, and even if they are not Prime members, they can enjoy free shipping on most products over $25. In addition, Amazon canceled a benefit that Prime members should have last year (free 2-hour delivery from Whole Foods Market). At that time, grocery prices in the US market fluctuated greatly, and Whole Foods Market was an important channel for Prime members to obtain affordable goods. After Amazon announced this news, it attracted a wave of condemnation and cancellations.

The question now is, how attractive is Amazon Prime membership after the price increase?

Although the increase in Prime membership fees has reduced the attractiveness of this service, in recent interviews with consumers, many consumers are still relatively satisfied with the Prime membership service and are willing to renew their membership. In addition to the most basic free shipping rights of Prime members, the accompanying Amazon streaming service and many Amazon original entertainment projects (such as games, TV series, etc.) are also very attractive.

Among the new Prime paid members added during the peak season at the end of last year, a considerable number were members whose memberships expired and renewed after 30 days of use. Currently, the renewal rate of Amazon trial members has reached more than 70%, which means that most people still choose to purchase Prime membership after experiencing delayed delivery. Amazon's brand and reliability are really deeply rooted in people's hearts. After waves of cancellations, the number of Prime members is still rising dramatically, which is also one of the reasons why Amazon raised prices this time.

This price increase currently only applies to membership prices on the US site, and there is no global price adjustment. Amazon is planning well by starting with the US site, which has the most mature market, to explore market reaction, and then follow up globally.

In this price adjustment, consumers who have already opened Prime membership can enjoy the price before the price increase before March 25. So there will be a very real renewal rate at that time, which can show how the market reacts to the price of $139.