Amazon Screws Prime Customers?
Eszter Hargittai has caught Amazon charging one price for ordinary customers and another, higher, price for Amazon Prime members like herself (and me).
So the thanks I get for paying for the Prime membership and shopping at Amazon a lot is higher prices. No thank you.
When I initially sat down to use Amazon, I was going to spend well over $1,000. I walked away spending nothing. Additionally, I have no intention of continuing my Prime membership (I disabled the auto-renewal for it immediately), unless I get some explanation and the chance to buy items at prices others are being offered them.
Eszter’s commenters aren’t sympathetic, with many arguing that, of course, Amazon is going to charge more to “make up” for the “free” shipping they offer Prime customers (there’s also a bizarre sub-thread about prime numbers which is only tangentially amusing). Others offer interesting economic rationales:
- “[S]ome shops use artificially low prices that are compensated by high shipping cost, and they of course do not offer free shipping.”
- “Amazon would be leaving money on the table if it didn’t charge you extra. Because you pre-pay the shipping costs, those are a sunk cost to you. If you go to another vendor, you will have to pay for shipping. Hence Amazon can now charge you a higher price and still beat another vendor’s price.”
- “Once you buy Amazon’s free shipping option, you are a captive consumer, just like the spectators at a baseball game. The hot dogs inside the baseball stadium don’t cost more even though the fans have already paid to get inside. They cost more because the fans have paid to get inside. You paid to get inside Amazon. That’s why Amazon can now charge you more.”
While compelling, these explanations make sense only in the case of one-time transactions. It’s true that Amazon already has Ezster’s $79 and that she’s now psychologically predisposed to buy from Amazon. But upon learning that she’s been had, she’s presumably going to not only cease buying from Amazon but tell her friends about it, thus costing Amazon not only multiple iterations of $79 Prime membership renewals but also future business.
UPDATE: Mark Jaquith and Chris Lawrence both note in the comments that Amazon’s practices may not be as nefarious as suggested: They’re quoting the best total price to all customers. In the case of Prime members, they may be better off paying a slightly higher base price on a product that’s eligible for free shipping, thus yielding a lower or equal aggregate price. I haven’t had time to investigate but that sounds plausible.