So a week or so ago in the Facebook group, I posted the news of Wal-Mart beginning to offer free two-day shipping. This is an interesting development that illustrates just how much Wal-Mart plans on targeting Amazon as a competitor. Some people have shown concern over the fact that Wal-Mart is doing this for free, whereas Amazon requires a Prime membership for free 2-day shipping. In my opinion, Wal-Mart is so far behind in the shipping game, Amazon doesn’t have anything to worry about. Anyone who has ever ordered online arbitrage from Wal-Mart knows exactly how far behind they are in shipping.
Well, in an apparent response to the new Wal-Mart shipping policy, Amazon has quietly changed theirs. There was no big press release or announcement. They simply updated their policy page without making a fuss about it at all. Their new policy states that any order over $35 will be eligible for free shipping, and if the order is books, the cut-off will be a measly $25. This mirrors Wal-Mart’s policy with the exception that Amazon doesn’t promise the shipping will be 2-day; only that it will be free.
If this policy sounds eerily familiar, it’s because it’s basically the same “Super Saver Shipping” that Amazon canceled a year ago, also without an official announcement. In fact, those living under a rock for the past year may not even realize anything has changed with the exception that the moniker “Super Saver Shipping” is no longer used.
Long time sellers on Amazon will be intimately familiar with this policy. You see, up to the point when they changed it, this policy had a big affect on many of our pricing decisions. Now that it seems the policy is back, maybe the time is right to explain some of the old methods of pricing.
It’s really pretty straight-forward. As an FBA seller, you are normally targeting Amazon Prime members. Since there are around 65 million of those, this is a great thing to do. This policy makes it even better. With this policy, you’re not only targeting Prime members, but also everyone else. To do that, all you have to do is pay attention to your pricing. If you see the buy box on a product is $32, you may want to price yours at $35. Why? Because there will be non-Prime members who actually click through past the buy box to find something that will qualify for free shipping. The logic is simple. $32 plus $5 shipping is more expensive than $35 with free shipping.
This pricing strategy is something to keep in mind any time the price in the by box is nearing the $35 cut-off. Never, and I mean NEVER price something at $34.99. This is not a smart thing to do at all because the non-Prime customer is paying just as much, but the product does not qualify for free shipping. You will increase your sales velocity quite a bit if you take advantage of this policy. This is also something to keep in mind when building bundles. If you don’t feel you have enough value in your bundle to price over $35, it may be a good idea to add enough to the bundle so that you can hit that $35 target price.
Time will tell if this pricing strategy will work going forward the way it did in the past. Since there are so many more Prime members now than there was then, it may not be as effective as we saw back then. Regardless, it is something to keep in mind and worth paying attention to.
Give us your thoughts on the new Amazon shipping policy in the comments below!