Amazon Prime customers had a quite a scare this week when The Wall Street Journal and other media outlets reported that members would no longer receive unlimited two-day shipping on all Prime items.
The confusion mounted around “Ship by Region,” a new program Amazon is testing that lets local retailers choose the area to which they’ll ship product.
According to news accounts, many people concluded this would limit the shipping area for Prime products, resulting in higher shipping prices, longer shipping times and fewer Prime options.
A Slight Exaggeration
Not so, reported GeekWire. The article quoted Julie Law, spokesperson for Amazon, who tried to clear up the confusion:
“These are blatant mischaracterizations of a program that is excellent for both businesses and Prime members. In fact, Prime members nationwide continue to receive unlimited Free Two-Day Shipping on more than 20 million items. This remains unchanged, which is counter to these stories.”
What’s Up with Prime?
Law added that Ship by Region would actually increase the number of Prime products available because retailers who would otherwise not have been able to participate can now do so.
Before introducing the test program, smaller, local retailers found it cost prohibitive to add their products to Prime due to high shipping costs outside of their geographic region.
Dave Parro, director of retail practice at Walker Sands, told CMSWire that Prime members should embrace Ship by Region, despite the conflicting information out there.
“There’s definitely a lot of confusion,” he said. “Ship by Region is ultimately a good thing for Amazon shoppers and local sellers. It’s an expansion of Amazon Prime that provides the opportunity for them to reach Prime members, while giving customers more options for two-day shipping.”
Why Ship by Region? Why Now?
With the recent launch of Jet.com, Parro believes Amazon is trying to find ways to hedge its bets on the shipping front.
“Jet is trying to be a competitor with Amazon and undercut it on cost,” he said.
“One way is shipping locally. If it's able to beat Amazon on pricing using local merchants, then it makes sense to expand Prime and include some local merchants, as well.”
He added that all e-commerce companies — and not just Amazon — want to optimize shipping for both speed and cost.
They’re looking at things like location of inventory, speed of delivery and offering multiple shipping offerings such as using carriers and drones.
The biggest question, said Parro, is: How quickly do customers want their products?
Customers Still Love Amazon
Judging from the public outcry over Ship by Region, customers really love Prime — and Amazon, commented Parro.
“Even though the program is not totally rolled out, the reaction shows that people are really passionate about Amazon and Prime,” he said.
“The uproar speaks to the brand loyalty of Amazon. People were upset about the potential of Prime being changed, which is good news for Amazon.”
But even though Amazon did a good job with damage control, it could have handled the situation better from the outset, he said.
“Amazon got the right information out there quickly in response, and got those stories corrected,” he said.
“But this is a good lesson for Amazon. Consumers love Prime and they love fast and free shipping. What they don’t understand are the logistics behind it all, so when Amazon announces a big change, they need to be careful how to position it and give as many details as possible.”
Whether or not Amazon goes further in trying to fend off Jet’s play for their market share in the area of shipping remains to be seen, he concluded.
“It will be interesting to see if they follow Jet’s lead and start offering lower prices for items that are located closer to the customer and can be shipped more cheaply.”
For More Information:
- Can Jet.com Recover from its Affiliate Flub?
- 3 Ways Jet.com Can Compete with Amazon
- Amazon Widens Its Moat
- Your Customers Love Online Shopping
Title image by Thomas Lefebvre.