Earlier this month, Amazon announced that the price of its Prime membership would be increasing. The firm cited rising labor and shipping expenses as justification for the price rise.
On Thursday, the online retailing behemoth announced a pricing increase for its Prime membership service after the release of excellent fourth-quarter sales figures. In the three months ending December 31, 2021, Amazon earned $14.3 billion on sales of $137.4 billion, resulting in $14.3 billion.
It is the company’s sixth straight quarter in which sales exceeded $100 billion, as Americans sought relief from the epidemic via online retail therapy throughout the outbreak.
As a result, Amazon’s profits surpassed Wall Street estimates, and the company’s shares climbed 13 percent in after-hours trade.
Hike in Amazon Prime membership
From $119 per year, the cost of an Amazon Prime membership will rise to $139 per year, up from $119 now. Prime members who pay every month will see their fees climb by $2, bringing them to around $15 per month.
Prime membership costs $20 more per year than last year, representing a 17 percent raise, or approximately three times the current inflation rate.
Starting on February 18, customers who join up for Prime will be charged a higher fee for the first time. According to Amazon, existing Prime members will be charged a higher price after March 25 or whenever their membership renews.
Amazon last hiked the price of its Prime membership in 2018, and it did so before that in 2014. A Prime membership subscription entitles users to free and expedited delivery on a wide range of items, as well as access to Amazon’s extensive movie collection.
According to Insider Intelligence’s analysis, approximately two-thirds of all homes in the United States have a Prime subscription.
Neil Saunders, an analyst at GlobalData Retail, said in a research note that any cancellations by customers who are put off by the price jump would likely be minor.
“Despite this, the program continues to provide outstanding value for money. It is also true that, in contrast to Netflix, Amazon has not raised its rates regularly. “Saunders was the author.
During the COVID-19 epidemic, Amazon, situated in Seattle, WA, was one of the only shops to grow significantly.
As conventional businesses selling non-essential items were temporarily or permanently shuttered, those confined to their homes resorted to the e-commerce behemoth for everything from food to cleaning supplies.
However, growth has halted as newly vaccinated Americans have become more confident in their ability to go out into the world. As well as dealing with global supply chain challenges and labor constraints, the firm, like many others, is struggling with a scarcity of staff.
“Like other retailers, Amazon has been subjected to inflationary pressures across its supply chain and logistical operations, and the company has been unable to ameliorate the strain despite its large volume, size, and trademark efficiency.”
” According to Saunders, operational expenses have increased by 12.9 percent, with shipping costs increasing by 10 percent,” Saunders noted.
Amazon’s operating income decreased by over half in the most recent quarter, prompting the company to explore new sources of revenue growth, including boosting the price of its Prime membership.
In his article, Saunders writes, “It is evident that Amazon will have to work considerably harder to achieve future gains, particularly given the fact that rivals are putting in far more effort with their omnichannel and digital offerings.”