Amazon Profit Triples, Consumers Love Free Shipping & Harry Potter

Harry PotterAmazon reported that profit more than tripled in the second quarter and was optimistic enough to raise its forecast for the year. And the sales momentum is set to continue, especially considering more than 2.2 million copies of “Harry Potter and the Deathly Hallows” were ordered on the site in advance of the July 21 release. That sets the record for Amazon’s largest new product release ever.

The company’s CEO, Jeff Bezos, is attributing the success to its membership program, Amazon Prime. Incidentally, I tried out Amazon Prime for the first time this past month (if you haven’t used it before, you can usually sign up for a one month free trial here). Here are the details:

Amazon Prime started back in February 2005 and is a membership that offers unlimited, express two-day shipping for a flat fee of $79 per year. There’s no minimum purchase requirement to order any of the over one million eligible items sold by Amazon.com. And, as part of the membership, next-day shipping is only $3.99 per item. In fact, you can place an order as late as 6:30 p.m. Eastern time and still receive it the next day. Amazon Prime membership can be shared with up to four family members living in the same household.

But is it worth $79? Well, it depends. I order quite a bit from Amazon each year, but I’m not sure if it’s enough that it costs me more than $79 worth of two-day shipping. Speaking of which, 90% of the time, I don’t care if I get an item in two days or in one week (slow shipping is free at Amazon for orders over $25). My general state of mind for online shopping is divided in two: I want it now (which online shopping can’t do for me) or I want it later (couple days, a week, what’s the difference? It’s later).

So while I found it fun to receive items earlier than usual for this past month, I’m not ready to pay for it. But that’s just me. Apparently, much of the consumer world loves the concept of free two-day shipping in exchange for $79 a year.

*Update* The New York Times has a story out with more details.

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