The Homa Files

Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

• See: Amazon lifts free-shipping threshold

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

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Here’s the skinny on the Amazon’s inadvertent market test …

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Early-on, Amazon launched  free shipping on $25 orders in the U.S. and sales skyrocketed.

In the UK, Amazon launched “nominal shipping” (think, 99 cents) for orders totaling the equivalent of $25.

Sales increased … but only by a fraction of the U.S. sales gain.

Proof-positive of the “power of free” … and evidence of an equally important dynamic:

There’s a big difference between “free” and “almost free” …

When you slip a price on something – even a small one, people are far less responsive.

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This entry was posted on November 19, 2014 at 6:59 am and is filed under Amazon, Free - Power of Free, ObamaCare, Price customization, Price elasticity, Prices. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.