Amazon’s Prime membership will become more expensive later this month, with the company citing rising wages and shipping costs to justify the price hike.
The online retail giant announced its Prime subscription price hike when it reported strong fourth-quarter sales on Thursday. Amazon made a profit of $14.3 billion for the three-month period ending December 31, 2021, on revenue of $137.4 billion. It was the company’s fifth straight quarter in which revenue hit $100 billion as Americans engaged in online retail therapy during the pandemic.
Earnings beat Wall Street expectations, and Amazon shares jumped 13% in after-hours trading.
Increase your Amazon Prime membership
Amazon Prime’s annual membership price is increasing to $139 from $119 currently. Prime members who pay monthly will see their costs increase by $2, to about $15 per month.
The $20 price increase for an annual Prime membership represents a 17% increase — or nearly three times the current inflation rate.
Prime subscribers for the first time will be charged a higher price starting February 18, while existing members will see a new higher price after March 25, or whenever membership is available. their renewal, Amazon said.
The last time Amazon raised the price of Prime membership was in 2018 and before that was in 2014. Signing up for a Prime membership offers members free and faster shipping on many products and access to mail. Amazon’s media library.
According to research from Insider Intelligence, nearly two-thirds of households in the US have a Prime membership. Neil Saunders, an analyst at GlobalData Retail, said in a research note, any consumer cancellations due to price increases are likely to be minimal.
“[T]His show still represents excellent value for money. There is also the case that, unlike Netflix, Amazon has not regularly raised prices,” Saunders wrote.
Pandemic broke out
Seattle-based Amazon is one of the few retailers to thrive during the COVID-19 outbreak. As physical stores selling non-essential goods close temporarily or permanently, locals have turned to the e-commerce giant for everything from groceries to cleaning supplies.
But growth has slowed as newly vaccinated Americans have become more comfortable going out. And the company, like many others, is dealing with global supply chain problems and labor shortages.
“Like all retailers, Amazon has faced inflationary pressures right in its supply chain and logistics operations, and even with its large volume, scale and signature efficiency, Amazon is still unable to ease the pressure. Operating costs increased 12.9%, including a 10% increase in shipping fees,” Saunders wrote.
In the last quarter, Amazon’s operating income nearly halved, leading it to look to other areas for revenue growth – including raising Prime prices.
“What is clear is that Amazon has to work a lot harder to make a profit going forward, especially as competitors are putting so much more effort into their digital and omnichannel offerings.” Saunders wrote.
The Associated Press contributed reporting.
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