Amazon started as online book store and has grown to be the worlds largest online retailer.
Amazon Pantry may move to subscription delivery model
Amazon are looking at new ways to extract more cash out of consumers and whilst it won’t impact you directly it will indirectly impact their loyalty to the marketplace. Amazon Pantry is to become a subscription service according to Bloomberg, instead of the current pay as you go model.
In the US, a Pantry delivery costs $5.99 per box (£2.99 in the UK) but Bloomberg report that this will change to a $5 per month subscription model. For those consumers who subscribe, Amazon will offer free Pantry deliveries for those spending over $40 per order.
There’s no real expectation that this will increase the number of customers using Amazon Pantry, it would appear more of an effort to encourage regular ordering and a way to extract money from those who order less frequently. If you don’t subscribe then the one off delivery cost will increase to $7.99 so Amazon will increase revenues whether you opt to subscribe or not.
Subscription fees are always a nice way for a company to increase revenues as the money disappears from your account even if you’re on your summer holidays and don’t use the service. The other upside is that, as with Prime Subscriptions, once you’ve subscribed you’ll want to get as much value as possible from your subscription and will likely order more regularly then ever before.
It’s worth noting that Pantry and grocery goods are most definitely not the most profitable sectors to operate in. Traditional supermarkets operate on razor thin margins and Amazon are no different with their key differentiator being convenience and customer service.
On the plus side for retailers, a customer that does subscribe to Amazon Pantry will almost certainly increase their spend once they don’t have to pay for individual deliveries and if they’re ordering more household staples on Amazon then they will probably increase their frequency for other purchases too. If consumers spend more on Amazon then with over 50% of sales going to 3rd party retailers that’s also good news for Amazon merchants.
This isn’t much different from monthly online delivery passes from supermarkets.
For example, Asda charge £5 per month and give free delivery in return – you also get the £5 back if you haven’t used the service in that month.
So if you use the service more than once a month, you will probably save.