Amazon.com Inc raises minimum order size for free shipping in U.S. in push to convert shoppers to Prime service

Amazon.com Inc. is growing the minimum order size free of charge shipping to US$49 from US$35, one step that could encourage more customers to sign up for Prime, the online retailer’s annual service which includes two-day deliveries.

The benefit of getting good people to subscribe to Prime services -for US$99 a year – is that they have a tendency to shop more frequently and waste your money, while access to other perks such as online movies, music along with other content keeps customers within Amazon’s shopping ecosystem.

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By encouraging non-Prime customers to spend more on one order, Seattle-based Amazon can also be aiming to reduce costs while boosting profits on each sale. The new threshold follows a 33 per cent jump in fulfillment costs – warehousing, packaging and shipping – within the fourth quarter, which outpaced a 15 per cent rise in product sales. Monday’s price increase may be the first since 2013, when Amazon raised the threshold to US$35 from US$25.

Amazon’s new minimum order size for free shipping brings it consistent with Wal-Mart Stores Inc.’s online shop, with a threshold of US$50, reely pickup in stores. Target Corp. has a US$25 minimum, while it’s US$35 at startup Jet.com Inc.

As Amazon expands overseas and seeks methods to lessen the cost of fulfilling orders, it might be getting ready to launch a global shipping and logistics operation that will compete with United Parcel Service Inc. and FedEx Corp.

Bloomberg News