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AMZN May Hike Amazon Prime Price to $40

Higher shipping costs are eating into thin margins


Subscribers to Amazon’s (AMZN) Prime service may soon have to pay more for unlimited two-day shipping.

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Source: Flickr

AMZN says that Prime — which currently costs a $79 a year — could see its subscription fee jump between $20 and $40. Word of the Prime price increase came on Thursday during a conference call during which AMZN officials discussed the Internet retailer’s recently quarterly results. AMZN says that it spent $1.21 billion on shipping during the fourth-quarter, up 19% year-over-year, USA TODAY notes.

AMZN Stock: Amazon Is Making a $1 Billion Content Gamble
AMZN Stock: Amazon Is Making a $1 Billion Content Gamble

Rising shipping costs are taking a bite out of already slim AMZN margins. During the fourth quarter AMZN said that shipping costs were 4.7% of net sales. During the same time last year, shipping were 4.5% of net sales.

Some analysts say the price hike won’t cost AMZN too many Prime subscribers, due to a limited number of competitors.

AMZN missed Wall Street’s fourth-quarter sales and profit forecasts, causing AMZN stock to tumble almost 8% in Friday morning trading. Prior to Friday, AMZN stock had gained more than 50% over the past year.

Article printed from InvestorPlace Media, http://investorplace.com/2014/01/amzn-may-hike-amazon-prime-price-40/.

©2017 InvestorPlace Media, LLC