Amazon raises free shipping minimum to $49

The e-commerce giant has been pushing customers to join its Prime membership service, as well as decrease its own shipping costs, which ballooned 37 percent to $4.17 billion in fourth quarter 2015.    Amazon.com Inc. has raised the minimum purchase required to receive free shipping for items purchased on its online marketplace 40 percent to $49. The minimum for books remains $25.
   The e-commerce giant previously increased the free shipping threshold to $35 in October 2013 after keeping it at $25 for at least ten years. The company did not offer any explanation for the move, although the Wall Street Journal reported Amazon said in a statement simply “from time to time, we review our shipping options.”
   One possible motivation is to encourage customers to join its Prime membership service. A Prime subscription includes unlimited two-day shipping on many items, as well as a streaming movie and music service for $99 a year.
   Amazon’s Prime subscribers are highly profitable, by some estimates spending double the amount of non-members over the course of a year, and also extremely loyal, meaning they cost less to retain. The company said in its last quarterly earnings report paid Prime membership expanded 47 percent in the United States and 51 percent worldwide in 2015.
   Amazon also noted in its fourth quarter 2015 results its shipping costs ballooned 37 percent to $4.17 billion compared with the fourth quarter of 2014. Granted, revenues increased as well, but shipping costs as a percentage of sales grew from 10.9 percent in Q4 2014 to 12.5 percent in the most recent quarter.
   The company has reportedly been exploring the idea of starting its own transportation company in order to supplement the capacity of existing providers and cut down on its own costs. Acquiring the necessary assets to build a global delivery network could put Amazon in complete control of the flow of goods in its supply chain, something few companies, if any, can claim.
   There have also been rumors Amazon could jump into the business of brokering freight capacity for other shippers and beneficial cargo owners, which could potentially disrupt traditional parcel players like UPS, FedEx and DHL.
   Increasing the minimum requirement for free shipping on orders seems, at least on the surface, to be a much simpler way to cut down on those high shipping costs.