Amazon shifts to a subscription model for Prime Pantry
Amazon’s Prime Pantry service is shifting to a $5 monthly subscription model from the $6 it currently charges per box.
Prime Pantry, launched in 2014, offers “low-priced, every-day essentials in everyday sizes.” Items include non-perishable goods such as detergent, paper towels, canned foods, breakfast foods, beverages and beauty and personal care items.
The programs selling points include offering savings without the need to buy in bulk and eliminating the need to visit stores for regularly-purchased items. Products arrive in one to four days. The Prime Pantry’s micro-website states, “Skip the trip to the grocery store and let us do the heavy lifting.”
Under the current set-up, users pay a flat fee of $5.99 to receive up to 45 pounds of selected items (the equivalent inside a four cubic feet box), encouraging consumers to squeeze as many items as possible into a box.
Under the updated formula, Amazon’s Prime Pantry service will cost $5 a month for unlimited orders, according to reports. Users must commit to order items amounting to at least $40 each month to earn free shipping.
Amazon will roll out the new monthly subscription service gradually. Shoppers will able to opt out of the service and pay $8 per box for shipping.
Bloomberg noted that Amazon’s fulfillment expenses — covering storing, packing and shipping — grew 43 percent in 2017, outpacing revenue growth of 31 percent, and noted that the viability of shipping bulky, heavy household items has long been questioned.
“Grocery has been a real challenge for them,” Sucharita Kodali, at Forrester Research, told Bloomberg. “They’ve not found a model that works yet. Raising the price won’t get you more customers. It gets you more revenue from a core group of loyal customers.”
The move comes as Amazon has been fine-tuning its Prime reach, including rolling out a special program last year aimed at those receiving government assistance and recently offering discounts to Medicaid recipients.
In January, Amazon raised the monthly Prime membership rate from $10.99 per month to $12.99, and its monthly cost to students to $6.49 from $5.49. The annual Prime fee was kept at $99.
- Amazon Prime Pantry is shifting to a $5 monthly subscription – CNBC
- Amazon Is Shifting Prime Pantry Service to Subscription Model – Bloomberg
- Amazon Pantry
- Amazon opens its pantry program to Prime members – RetailWire
DISCUSSION QUESTIONS: Does it make sense for Amazon to shift Prime Pantry to a subscription model? Does the move make Amazon any more or less of a competitive threat in the household essentials category?