The Amazon Prime small order argument

[bwframe]

I have an order on the way from Amazon. The item total is less that $3. My Prime membership got me this order shipped and due to be received next day. Turn around, less that 24 hours total.

I love the Prime program for this reason. The question is how can this be maintained? Amazon is taking a huge financial hit on this order.

I wonder what is the tipping point on loss leaders like this? Should I try not to abuse this in an effort to help Amazon keep pricing low and shipping fast with no minimum orders?

Or should I write this off in my head because Amazon overall is swimming in money. On top of the fact that I pay the annual ever increasing high price of the Prime membership?


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[Libertarian01]

I have an order on the way from Amazon. The item total is less that $3. My Prime membership got me this order shipped and due to be received next day. Turn around, less that 24 hours total.

I love the Prime program for this reason. The question is how can this be maintained? Amazon is taking a huge financial hit on this order.

I wonder what is the tipping point on loss leaders like this? Should I try not to abuse this in an effort to help Amazon keep pricing low and shipping fast with no minimum orders?

Or should I write this off in my head because Amazon overall is swimming in money. On top of the fact that I pay the annual ever increasing high price of the Prime membership?


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An interesting question. While they lose on many shipments, and break even on others, there must be quite a few they profit from.

Let us also not forget that by them providing the shipping themselves they get to write off ALL of the costs to ship. While they could also do this with a 3rd party shipper, they have 100% of the control of their shipping now, save for the items done through USPS.

The one we talked about in business class years ago is Swanson! How can they maintain affordable prices while paying for refrigerated trucks and delivery???

Regards,

Doug

 

[mom45]

I used to try to consolidate my orders. They still ship everything in separate boxes and I end up with multiple drivers coming to my house on the same day or each item in it's own box. Now, I just order what I need when I think of it...sometimes ordering several times during a day. I have stuff coming via Amazon, Fed Ex and UPS right now...all ordered thru Amazon. I mostly do the Prime membership for streaming thru the firestick, but the free shipping is a nice perk. Capital One has an app that checks my orders and lets me know if I can buy it from another site cheaper...had one today that came up saying WalMart was the same price but had cash back on the item so I switched and ordered it on their site. They do free shipping on a lot of stuff and it will be here in two days.

 

[radar8756]

Amazon has a Rewards program for Consolidating shipping - You get a Digital Credit - for combining 3 shipments on different days into 1 day

Now I purposely split orders into 3 items to take advantage of this ... a 6 item order split into 2 orders = $3 credit

I was able to purchase a few E-books with my credits - win for me

 

[littletommy]

I used to try to consolidate my orders. They still ship everything in separate boxes and I end up with multiple drivers coming to my house on the same day or each item in it's own box. Now, I just order what I need when I think of it...sometimes ordering several times during a day. I have stuff coming via Amazon, Fed Ex and UPS right now...all ordered thru Amazon. I mostly do the Prime membership for streaming thru the firestick, but the free shipping is a nice perk. Capital One has an app that checks my orders and lets me know if I can buy it from another site cheaper...had one today that came up saying WalMart was the same price but had cash back on the item so I switched and ordered it on their site. They do free shipping on a lot of stuff and it will be here in two days.

Yep. I always click the box to combine all shipments when I order multiple items. Not ONCE have they ever actually done so!

They have combined stuff that was supposed to ship days apart, so I don’t know, there’s no rhyme or reason to it.

 

[Leo]

When they shipped by USPS I was always amazed when a Postman would drive up on Sunday to deliver an Amazon package, like a replacement knob for a kitchen pot. The part was maybe $3.75. The same USPS charges walk in customers $6.75 to ship a little box with eyeglasses from Lafayette, to West Lafayette on normal business days with no Sunday service. .

I have always believed that when things don't make sense, it is because no one is telling you the truth. Between the tax payer subsidizing every piece of real estate Amazon uses, and the Post office subsidizing the shipping, I don't think Amazon is eating as much money as it appears. I am told that the real profit centers of Amazon is information data on people, data for marketing and data for US Government tracking you.

 

[Gaffer]

Probably about the same as brick retail. A million years ago when I was in retail management, we had sales that made good money and sales that we lost money on. Could be somewhat like when we had to work with a customer for an hour to help pick out a 10-cent screw, as opposed to the customer that had a large list which just amounted to writing it up.

oh.. and what Leo said above...

 

[KLB]

I have an order on the way from Amazon. The item total is less that $3. My Prime membership got me this order shipped and due to be received next day. Turn around, less that 24 hours total.

I love the Prime program for this reason. The question is how can this be maintained? Amazon is taking a huge financial hit on this order.

I wonder what is the tipping point on loss leaders like this? Should I try not to abuse this in an effort to help Amazon keep pricing low and shipping fast with no minimum orders?

Or should I write this off in my head because Amazon overall is swimming in money. On top of the fact that I pay the annual ever increasing high price of the Prime membership?


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Next day means it is in the local warehouse. They load it on one of their trucks that will be driving close to your house already delivering to other customers in your area. It costs them little to do that.

 

[KLB]

Yep. I always click the box to combine all shipments when I order multiple items. Not ONCE have they ever actually done so!

They have combined stuff that was supposed to ship days apart, so I don’t know, there’s no rhyme or reason to it.

I assure you there is totally rhyme and reason to what they do. It revolves around which warehouse the items you are ordering are currently in.

Their warehouse management is pretty extraordinary.

 

[Gingerbeardman]

Lose a little on one sale, sure, but just speculate on how many loyal customers they have, buying all kinds of stuff everyday. The sheer amount of stuff you can get while lounging on the couch is the next iteration of shopping-big box stores crushed the small town retail store, and Amazon took the next step-remove the need to leave the house. Then they discovered they could charge for prime! I'd like to see a spreadsheet of loss leaders versus high profit sales, just for fun. Or Keurig bit the dust awhile back. I bought a replacement on Amazon at maybe 6pm, and it was on my porch by 11 pm. That sort of service will have customers coming back again and again!

 

[BehindBlueI's]

I have an order on the way from Amazon. The item total is less that $3. My Prime membership got me this order shipped and due to be received next day. Turn around, less that 24 hours total.

I love the Prime program for this reason. The question is how can this be maintained? Amazon is taking a huge financial hit on this order.

Amazon could wrap your item in $100 bills and not take a huge financial hit on our order.

They will lose money on your order but the incremental cost of delivering your item is not even a rounding error to the fixed costs they have to keep those logistics chains in place. Having those logistics in place is what makes Amazon what they are. The fact they lose some money on some deliveries is understood and rolled into their overall business plan.

You value the ability to get that delivery, so you keep your Prime membership. Prime membership is a push for you to use Amazon more. The more you use Amazon the more bites at the apple they get to make money off you and *equally important* the fewer bites at the apple you give competitors. Imagine Amazon makes a given delivery route (themselves or by contract) and drops off 50 packages. A competitor drops off 7. Who's cost and profit structure looks better even if they both took a loss or made a gain that day?

Prime membership encourages you to use other Amazon services. Amazon music, video, gaming, etc. All have free versions and paid versions. Kindle books, audible upgrades, etc. etc.


I get my Prime for free through a credit card (Navy Federal Flagship). If you want Prime, are a veteran, and have good credit it's the way to go. $59 annual fee for the card, which is less than a Prime membership by itself, plus several other credits and bonuses.

 

[littletommy]

I assure you there is totally rhyme and reason to what they do. It revolves around which warehouse the items you are ordering are currently in.

Their warehouse management is pretty extraordinary.

Oh definitely, on their end. I’m sure they know exactly what they are doing, I just can’t comprehend the logistics that goes into successfully getting say, 1000 packages to the correct customers, not to mention the millions of packages they deliver every day.

Like I said, I always click the box to consolidate multiple items ordered, and it has never actually happened. I’ve had as many as 4 different orders delivered a few hours apart, by 4 different drivers, even though I clicked the box. I guess it’s an automatic setting to give the customer the option if more than one item is ordered at a time?