Starting May 11, the increase would be valid for new customers. For the first time in four years, the company’s chief financial officer announced on a call with analysts on Thursday that Amazon’s Prime membership would increase its price in the U.S.
Soon, members would pay $119 a year for the shipping and entertainment membership program. For current Prime members, the new annual fee will apply starting on June 16 along with their renewals. Prime’s price was last raised by Amazon in 2014 when it cost customers $79 a year.
Prime has more than 100 million members worldwide announced Amazon CEO, Jeff Bezos. The revelation of the number of the company’s members is a surprise due to Amazon not opening up about the number of Prime members in the past.
Prime members make more purchases on Amazon than non-Prime members and spend more per year. This is one of the factors that make Prime the most critical lever in Amazon’s dominant online retail machine.
The purpose of the program increase is to raise fund for Amazon. The number of products available for free two-day shipping through Prime has grown from 20 million in 2014 to more than 100 million today, Amazon CFO Brian Olsavsky said. Amazon has invested heavily in its own logistics network to supplement UPS and FedEx deliveries to meet demand.
Billions were spent by Amazon to acquire and create an extensive library of movies and TV shows that Prime members stream for no extra cost. Amazon executives say that the entertainment offering helps court new Prime members and gives current Prime members another reason to stay with the program.