Though those workers aren’t necessarily paid a lot of money—Amazon disclosedlast week that the median compensation of its employees is $28,466—delivering these packages is a costly proposition. In 2017, Amazon spent $21.7 billion on shipping costs, it said in its most recent annual report, nearly double the amount it spent in 2015. Some of those costs are undoubtedly because Amazon spends a lot of money sending packages for free to its 100 million Prime members around the world. This is, in some ways, smart strategy. Prime customers get so accustomed to free shipping that they just start buying everything on Amazon. “They are trying to get you hooked on the convenience,” David Vernon, an analyst with Bernstein, told me. “Once they get that Prime ID stuck in your wallet, and you start hitting the buy button, are you really paying the attention to what the price is?”
But many of those customers could be unprofitable Prime customers like me. Even though I pay the annual Prime membership fee, I return so many orders that I’m not convinced it covers my shipping costs. In the last two weeks alone, I’ve ordered and returned two items, meaning Amazon paid to ship the package four separate times and got no sale. As the costs of shipping rise, Amazon may find more and more of its customers similarly unprofitable.
This may be why Amazon seems to be coming up with more ways to get its customers and sellers to help subsidize the cost of free shipping. On Thursday, during the company’s quarterly earnings call, Amazon said it would raise the cost of annual Prime memberships to $119, from $99, effective May 11. The increase in costs comes as 100 million items are now available for two-day shipping, up from 20 million in 2014, said Brian Olsavsky, Amazon’s chief financial officer, on the call. In January, Amazon also raised seller fees for various apparel categories; it raised fees for book and video sellers last year.
For more read the full of article at The Atlantic
