Amazon’s Prime Time Is Now
In less than two years, Amazon Prime has redefined retail delivery and shaped consumer expectations for convenience and service. The effects of Amazon Prime, however, extend beyond traditional retailers, also sweeping up the grocery and foodservice industries (not to mention the small matter of film, television and streaming media).
Amazon Prime service is so ingrained in retail culture that definitions may not be necessary – $99 a year for streaming television, movies, music and more along with free two-day shipping on all orders. From a select and growing list of about 20 metro areas (a list destined to grow in short order), Prime customers are eligible for Prime Now services – two-hour delivery on 25,000 products sold by Amazon along with the offerings of local retailers and restaurants.
The Prime Now program increasingly appears to be a focal point of Amazon efforts, recalibrating consumers’ delivery expectations from “days” to “hours” and creating an additional competitive advantage for the company.
We’ve seen a number of significant Prime Now developments from Amazon in recent weeks that reinforce the idea that we’re witnessing a remarkable technological, logistics and retailing plan play out before our eyes.
To kick things off, Amazon made two moves to remove barriers to consumer adoption.
They made enrolling in Prime and using Prime Now more accessible for first-time users. In March, the company instituted a monthly payment option ($10.99 per month) in addition to its annual plan. For what amounts to a surcharge of $32 per year, Prime is now available for extended trials and seasonal signups for the segment of Amazon customers that psychologically finds the smaller price point more acceptable. That’s the carrot in the pricing structure. Amazon earlier introduced the stick portion of the carrot-and-stick equation, increasing free-shipping minimums from $35 to $49. Combined, the moves create a consumer mentality that the purchase of Prime is simply the logical choice – something they can’t afford not to purchase.
In another bid to make ordering easier, the company went live with a dedicated Prime Now website to augment the existing Prime Now app “in response to consumer demand.” With a website, Prime Now becomes accessible for a large part of the customer base more comfortable ordering from Amazon the old fashioned way.
Shifting gears slightly to product offerings, news broke this month via The Wall Street Journal that Amazon is set to roll out a suite of private label grocery brands, one of which is reportedly dubbed Wickedly Prime. These brands will only be available via the Prime Now service, effectively increasing demand for Prime Now and doing for snacks and diapers what it has done for electronics – capturing a whole lot of market share.
Expanded service is the name of the game in New York City. Prime Now one-hour restaurant delivery launched in May in Manhattan (and Dallas). Currently available in 10 cities, this service is free (for now) to Prime customers and requires restaurants to maintain current pricing (while forking over a percentage of the bill to Amazon).
Two-hour delivery of household goods and the related items available via Amazon Prime Now was a need that consumers had yet to express. One, in essence, that did not exist. But as Amazon expands Prime Now and as consumer are increasingly drawn into to its ecosystem, competitors are increasingly scrambling to fill a need that Amazon had created.