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Amazon Prime to ditch subscription fee?

18 March 2013 - 12:02 by Simon Crisp

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Amazon Prime has been a big success for the world's largest e-commerce firm over the last few years and the latest figures suggest that the consumers who pay its annual subscription are particularly valuable to the retail giant.

Wired reports that each year an average Amazon Prime user will spend twice as much on the site than a non-member, while also delivering much more profit to the company as a result.

Prime allows you to enjoy free delivery within two days of placing your order and also comes with benefits, like access to Amazon's on-demand video streaming service.

Ten million people are currently signed up to Amazon Prime, which is up from seven million in 2011. This has led to suggestions that Amazon might actually cut the price of a Prime subscription, or even make it free of charge.

Turning Prime into a freebie would be good for Amazon, because it might potentially encourage a greater level of loyalty amongst its users, according to TechRadar.

At current growth levels, analysts believe that Amazon Prime will have 25 million subscribers by 2017, even if it does not become a cheap or free service.

Should Amazon choose to slash the cost of using Prime, the number of people returning to it exclusively when they carry out safe shopping online could be even higher.

This is obviously bad news for Amazon's rivals and might prove problematic for smaller retailers, since they will still have to charge for express delivery services, as they lack the economies of scale that are available to this dominant firm.

Of course, consumers may feel that Prime success can, in turn, be a real benefit for them, particularly if its features are unlocked for any Amazon customer to access free of charge. Delivery costs are often cited as the main annoyance when enjoying safe shopping online, so kicking them to the curb will appease customers.