Amazon Customers Don’t Pay for Shipping (Explicitly)
As the holiday shopping season ramps up, Amazon hits its stride and will successfully deliver close to a billion packages in the next several weeks. We looked at the shipping choices of US Amazon customers to understand the billions of dollars of shipping expense that Amazon incurs. As it turns out, most customers find a way to not pay Amazon for transporting those packages from the warehouse to their house - or at least not to pay explicitly.
We acknowledge a fundamental distinction between Prime members and other Amazon customers. Even after years of adding features to a Prime membership, the principal benefit remains free and fast shipping. So, we’d expect the 70% or so of US customers that are Prime members to ship their purchases using Prime Shipping, and that is largely true. Interestingly, the non-Prime customers are primarily able to avoid incremental shipping charges, too.
Almost all Prime members, close to 90% in fact, use free Prime Shipping (Chart 1). The remaining Prime member orders are split evenly between Free Super Saver Shipping and actually paying for shipping. Reasons for this vary. Many are items from Amazon third-party sellers not participating in the Fulfilled by Amazon program, so they do not offer Prime shipping.