A product might cost only a dollar and still will be delivered for free to Amazon Prime users the next day. Experts warn that the idea may affect smaller stores and wonder how much the e-commerce giant will have to contribute to the transport costs.
Until now, free and fast delivery was possible for small, cheap products only if the whole shopping basket cost no less than $25. Thanks to this, Amazon was sure that the customer would spend more on shopping than they would on delivery, notes vox.com.
But this is about to change. The price cap for users of Amazon Prime (inter alia in the USA) has been removed. The company explains that the fastest types of deliveries (such as same-day or no more than one-day shipments) are handled by local warehouses, resulting in shorter routes for trucks and lower CO2 emissions.
Canned tuna from the online store
So much for Amazon. Experts anticipate a number of other possible consequences. First of all, in their opinion, it may lead to a change in customers’ purchasing habits.
Interestingly, Amazon is having trouble selling low-value products. I am thinking, for example, of food products. Few people will buy, for example, a can of tuna via the Internet, because it is not very cost-effective. With zero delivery charges, the situation will change somewhat. The market may be freed and customers may become accustomed to such purchases. With time, Amazon may raise the price limit or start charging customers with additional costs,” observes Arkadiusz Kawa, Director of Łukasiewicz Research Network – Institute of Logistics and Warehousing.
According to some, small shops may fall victim to such a policy in the future.
If such items (small and cheap – editorial note) are now available to buy online and can be shipped to your home the next day, people have no reasons to visit brick-and-mortar stores, claims businessinsider.com.
Did they count it?
Experts also wonder how much Amazon will contribute to this idea.
There’s no way that shipping costs are less than 75 cents, and there’s no way any other company that wants to sell a makeup brush could deliver that for free. It’s not possible and it highlights how pricing strategies can be used to drive rivals from the market,” warns Sally Hubbard, an antitrust expert, quoted by the economic portal.
Arkadiusz Kawa is of the same opinion.
It seems to me that it will not be profitable for Amazon in the short term, but in the long term it may bring several benefits. It is certainly a strategy that aims to attract more customers and help to monopolize the market,” he says.
He adds that the giant, paradoxically, does not have to waste much on such free delivery.
We have to remember that Amazon does a lot to develop its own supply network. Maybe they have calculated that such products will fill empty spaces in trucks. In theory, there is still the problem of a very expensive last mile, because these small products will have to be delivered to the end customer, but we have to check whether such deliveries will not be made to collection points or parcel pick-up stations. Then it may turn out that Amazon does not have to pay extra for such a delivery,” he concludes.