How, Inc. (NASDAQ:AMZN) Made Prime Into An Indispensable Product You’d Pay Anything For


A few weeks before announcing its earnings in February 2005,, Inc. (NASDAQ:AMZN) Founder and CEO Jeff Bezos, on one Saturday, called a group of employees for a meeting at the boathouse behind his home.

The company’s employees had been exploring the possibilities of having a membership program whose main focus would be offering quick shipping to customers. The idea eventually got the attention of the CEO. At the boathouse meeting, Bezos gave a clean bill to the idea and told the employees that it was it was a good idea and urged them to move quickly and start implementing it.

The company later unveiled Amazon Prime when announcing its earnings report that February. The announcement was initially met with media silence and minimal coverage. Many concentrated on how much it would cost the company to offer two-day shipping service to customers for just $79 a year. Many did not think of how much the new initiative would help in changing customer online shopping behavior. At the time, the CEO said that although the initiative is expensive in the short-term, it brings a lot of benefit and is very convenient for customers. As often the case, Bezos was proven right.

Las week, the company announced that Amazon Prime as over 100 million subscribers spread out globally. Many of the customers were attracted by the company’s promise of a seamless shipping experience for their online and offline shopping needs.

The company now wants customers to pay for the service. On Thursday, Amazon announced that it will be increasing the annual charges for Prime from the current $99 to $119 in a move the company says will help in offsetting the increasing cost of offering the service. Although the move is likely to spark off an outcry among customers over the rise of prices, analysts have predicted that customers will finally embrace the change because Prime has increasingly become indispensible for many online shoppers.

During its launch in 2005, the main selling point of the service was the two-day shipping on purchases. Currently Prime offers same-day and even two-hour delivery on several products including groceries from Whole Foods, which Amazon purchased in 2017.

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