Why Amazon Made Prime Membership Plans $2 Before Prime Day
The biggest online summer sales event of the year is almost here, and Amazon is making tweaks to its membership plans to encourage customers to enroll in its program.
Amazon Prime Membership Will Just Be $2
Before the two-day sale extravaganza that’s set to take place this July 11 and 12, Amazon is giving a 30-day free trial to users who’ve yet to experience the full benefits of Amazon Prime. After the trial is over, new customers will be able to continue enjoying the benefits of Prime for another week paying only $2.
Once the week is over, Amazon will go back to charging $15 a month, but you can choose to cancel the membership after the sale.
This move has a two-fold purpose. First, it allows customers who have not yet signed up for a Prime membership to experience all the perks of being a Prime member free of charge. Second, it’s a way to bring back Prime members who have unsubscribed by giving a weeklong subscription of only $2, a marginal discount from their weekly subscription rate of $3.75 a week ($15 a month).
However, current Prime members are not eligible for the $2 weeklong membership plan.
How Successful Has Amazon Been Since Introducing Prime Membership?
After its launch in February 2005, Amazon’s free two-day shipping incentive has come a long way. With an initial price point of $79 a year, Prime members were initially given unlimited 2-day delivery for all their orders. Today, aside from multiple perks in delivery, Prime members have access to Prime Video, digital books, and unlimited photo storage in Amazon Drive.
Amazon first jacked up its annual rates by $20 in 2014. Since then, they’ve followed a pattern of raising their prices by $20 every four years (Amazon claims membership fees are only due to a spike in service and labor fees). Amazon increased Prime membership in 2018 to $119 a year, and most recently in 2022 to now $139 a year. If this theory holds, we should expect the next increase to come by 2026.
The $20 increase in annual membership fees hasn’t affected much of their sales though. As per Backlinko, there are now over 200 million Prime members around the world, which is double their subscriber count from 2018. The study also found that the number of Prime members in the US will grow to 168.3 million by 2025.
In addition, Statista found Amazon’s net sales of all subscription services in 2022 was $35.22 billion. That’s a $32.46 billion increase from 2014.
How Will the Change in Membership Fee Affect This Year’s Sales?
If you’ve been selling on Amazon for a while, you know how important Prime Day is for both buyers and sellers. While it’s hard to predict the exact sales Prime Day will make this year due to changing consumer behavior, reports have shown sales during Prime Day reached $12 billion in 2022, a near $1 billion increase from 2021. It also gave Prime members over $1.7 billion in savings, resulting in a 141% increase in online sales.
Amazon never releases their net sales from the event, but BofA Global Research analysts Justin Post and Michael McGovern said the results were a good sign: “Prime results seem fairly positive overall, in our view, with 20% unit growth being a strong number, given U.S. e-commerce growth expectations below 10% in 3Q.”
