In May, Amazon is expected to roll out Prime Now, a
smartphone app they have had since 2014, to their full website platform. For
Prime Now, customers must have the Prime account but with this, in its 20 or so
participating cities across the United States mostly and other international
cities, the members get to enjoy free 2-hour delivery, $8 1-hour delivery, and
can now purchase food. One major emphasis the article makes about this roll out
is that with the website introduction, they are selling advertising space, and
it’s not cheap with the price tag of $500,000 which gets 2 weeks of advertisements
on the website and access to Amazon customer’s emails to send promotions. The
emphasis of this point is besides the numerical benefits, is it also associates
the advertiser with Prime Now and the big roll out which is huge in the eyes of
consumer and their perception of the advertiser. Secondly, the fact of
perishables like food and groceries is huge especially with rush delivery.
There are many other companies that do this already like Order Up or groceries
stores like Giant, but none of them will have the infrastructure and the
materials to run orders so quickly and with as much volume as Amazon will.
Thirdly, a major emphasis of the article is that if this convinces more casual
customers to shift to a prime account and this will make Amazon a lot of profit
solely off of the fact when It’s all said and done, Amazon does make more money
off of Prime subscribers than non-prime subscribers. And in addition to this
push, they raised the minimum price of free shopping from $35 to $49 for
non-prime subscribers.
One critique of this article is that they do not highlight
how effective it was to have Prime Now on the mobile app alone, which statistically,
mobile shopping is expected to bring in $96.2 Billion this year which is a
quarter of all e-commerce. Now bringing Prime Now to the website platform will
increase the general exposure of the service, but the smartphone app is very practical
for a lot of situations and probably will contribute to a portion of the use of
the service. Secondly, something I think the article could have gone into more
is how with Prime Now, Amazon is supporting products that are not from Amazon
warehouses where previously, they kept to their own products. Obviously with
providing perishable food deliveries, amazon does not have a huge choice in the
matter but to let grocery store and restaurants provide their own products, I
would like to know the profit breakdown of who gets what. Finally, Something
the article did not mention but is important is the fact that Amazon opened up
the option to Sprint customers to have a monthly option for Prime Now (http://www.geekwire.com/2016/amazon-prime-available-month-month-youre-sprint-customer/).
With a $10.99 monthly subscription and not a lump sum, it gives the select customers
a chance to test and see if they like the service.
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