Do you think those pesky shipping charges make Internet customers a little less willing to shop online? Today, word has it that Amazon (NASDAQ:AMZN) will offer its customers unlimited "free" shipping -- for a fee, of course. Although the move was touted as a way to shore up customer loyalty, it seems to me a nominal move toward such a result.
According to various news agencies, Amazon, a Motley Fool Stock Advisor pick, will waive the costs of two-day shipping for customers who pay a $79 flat rate per year. So, calling this shipping deal "free" is of course bending the meaning of the word.
The company admitted that this initiative will be "expensive" but said it has the long-term effect of ensuring customer loyalty, according to a Wall Street Journal article. Many of us who have watched Amazon over time know that there's always the concern that Amazon's shipping deals erode profit margins.
Sure, this move should be a sweet deal for people who like to shop online -- and also like to get their stuff as fast as possible. However, the way I look at it, Amazon's existing free Super Saver Shipping -- which offers free shipping on orders over $25 in exchange for a slightly longer wait time -- dilutes the effectiveness of this ploy.
It's not the first time in recent history that Amazon has offered a little extra for customer loyalty. Recently, Amazon offered customers who proved they utilized its A9.com search engine a little extra discount on top of its already lowered prices on various and sundry goods.
Word of the new offer comes ahead of the online giant's fourth-quarter earnings report, expected later today. And of course, that's the really big story -- after all, there have been indications that Amazon might have an amazing quarter, although eBay's (NASDAQ:EBAY) recent numbers left some investors cold. Then again, Amazon's last quarterly showing was a bit on the lackluster side.
At any rate, in my opinion, this newest shipping ploy won't have the same magic that free Super Saver Shipping has had with customers. Amazon will likely have to dig a little deeper in its bag of innovations to come up with added loyalty from increasingly sophisticated online shoppers.
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Alyce Lomax does not own shares of any of the companies mentioned, although she's a big fan of Super Saver Shipping at Amazon.
