Unique competitive strategies fascinate me so it goes without saying that Amazon’s business strategies fascinate me. They have always marched to the beat of a different drummer. One of their more unique competitive strategies has been free 2 day shipping via Amazon Prime. Two years ago I subscribed to Amazon Prime to see if I would break even on the shipping while enjoying some Netflix type video streaming. What I found surprised me. I purchased more incidental items through Amazon and rarely used the video streaming. I suspect this incidental shipping is killing Amazon’s bottom line. As an example I was repairing a computer and needed some thermal paste. Rather than going to the local computer store I ordered it I from Amazon because I had free shipping. The paste cost me $5 and was shipped to me using UPS. As a person who is real familiar with shipping costs, I am guessing that Amazon lost $5 on that transaction. I followed that up next week with a $10 purchase for a different repair. For high priced items I found that I could find lower prices that include free shipping outside of Amazon if I ran a simple internet search. Since free shipping is such a mixed blessing, I was debating whether to pull the plug on Amazon Prime this year. Now we hear this. It should be interesting to see how the Amazon’s competition respond.

Amazon also said it is considering raising the price of its popular Prime service by as much as $40 a year due to higher fuel and other shipping costs.