# Someting I don't get about "Amazon Prime" $100 annual shipping deal **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 25, 2014, 2:27am UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499 "2014-03-25T02:27:21Z")\ **Posts on this page:** 17\ **Page:** 2
**Author:** ![Stranger\_On\_A\_Train](https://avatars.discourse-cdn.com/v4/letter/s/13edae/32.png) [@Stranger\_On\_A\_Train](https://boards.straightdope.com/u/Stranger_On_A_Train)\ **Post date:** [March 25, 2014, 2:54pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/21 "2014-03-25T14:54:56Z")
> [@Projammer](#): > > Have you seen a frickin Amazon warehouse? > … > ETA: Google image search Amazon warehouse. It’s a thing. Sure, except most of these warehouses are not owned or operated directly by Amazon; they’re owned or operated by subcontractors to Amazon which get paid on a Net 30 or longer terms from time of sale. (Amazon is hardly alone on this; Walmart has been following this model for decades; until product is actually sitting on shelves in a storefront, the clock hasn’t even started, and Walmart is notorious for starting the “Net 90” terms, e.g. they don’t even pay for inventory in the same fiscal quarter that it is sold.) And Amazon is increasingly going toward schemes in which the actual inventory that is on the books for Amazon is minimal; ultimately, the business model of Amazon is to be a complete passthrough for products sourced from anywhere. And if Amazon is not posting a net profit, it isn’t because they don’t have positive margins on damn near everything they sell; it is because reinvesting in the business and posting losses on things like Amazon Instant Video allows them to increase marketshare and awareness while sheltering earnings from corporate taxes. Again, this is nothing new; pharmaceutical and petroleum companies (as just two examples) have been posting “massive losses” for decades while making plenty of revenue. Stranger ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 25, 2014, 3:00pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/22 "2014-03-25T15:00:26Z")
When Amazon announced their earnings most recently and again reported little profits, I heard grumblings from analysts on the part of the shareholders, who would like to see profits. My understanding is that this is a big reason they increased the price for the Prime membership from $79 to $99. ---
**Author:** ![RaftPeople](https://avatars.discourse-cdn.com/v4/letter/r/6f9a4e/32.png) [@RaftPeople](https://boards.straightdope.com/u/RaftPeople)\ **Post date:** [March 25, 2014, 3:26pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/23 "2014-03-25T15:26:18Z")
> [@Stranger\_On\_A\_Train](#): > > Sure, except most of these warehouses are not owned or operated directly by Amazon; they’re owned or operated by subcontractors to Amazon which get paid on a Net 30 or longer terms from time of sale. Are you sure? I’ve never heard of it and I know some of the people that build their conveyor systems in their DC’s. I also see they just spent 14 billion building 50 more DC’s since 2020, that would also imply they own them. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 25, 2014, 3:42pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/24 "2014-03-25T15:42:52Z")
Amazon is certainly beating the brick and mortar stores. A few months ago I wanted to buy an HDMI cable. I priced it at Target and Radio Shack, it would have run me about $25 or $30. Then I checked on Amazon. As low as seven bucks. Even without Prime shipping it would have been a deal, WITH Prime shipping it was a deal and a half. I think the only reason a lot of brick and mortar stores survive is informational lag. We order a LOT of stuff from Amazon. Our biggest coup: the six foot screen HD TV we got for $700 through Amazon a few years ago. Free shipping via Prime. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [March 25, 2014, 3:59pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/25 "2014-03-25T15:59:15Z")
> [@Projammer](#): > > I’m pretty sure it’s a bit like insurance too. There are enough people who don’t use a hundred dollars to at least partially offset thee and me getting our money’s worth. I’d bet it’s a net profit on it’s own, just like the upgraded memberships at Sam’s, Costco and BJs. Do the math: for every family that buys enough to get $51-66 back (the difference between regular and plus membership fees), there is some multiple that never comes close. $80-100 takes a lot of ordering to eat up… and as it’s win-win even at a break-even point, it’s likely win-winnier for a majority of Prime subscriptions. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [March 25, 2014, 4:00pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/26 "2014-03-25T16:00:53Z")
> [@Evil\_Captor](#): > > Our biggest coup: the six foot screen HD TV we got for $700 through Amazon a few years ago. Free shipping via Prime. That’s a great price, but look around. Most sellers of major appliances include free shipping. (I haven’t bought an appliance B&M in over 10 years and can’t even estimate how much we’ve saved doing so. Prices 50-60% of B&M standard discount and sale pricing, no tax, no shipping.) ---
**Author:** ![ISiddiqui](https://avatars.discourse-cdn.com/v4/letter/i/97f17d/32.png) [@ISiddiqui](https://boards.straightdope.com/u/ISiddiqui)\ **Post date:** [March 25, 2014, 4:22pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/27 "2014-03-25T16:22:17Z")
> [@Evil\_Captor](#): > > I think the only reason a lot of brick and mortar stores survive is informational lag. Well, also, instant gratification. And, some things ARE cheaper at local stores - such as toiletries. I know Amazon has gotten into them recently, but their prices are pretty high compared to the local brick & mortar stores for them. ---
**Author:** ![Thudlow\_Boink](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thudlow_boink/32/320_2.png) [@Thudlow\_Boink](https://boards.straightdope.com/u/Thudlow_Boink)\ **Post date:** [March 25, 2014, 5:27pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/28 "2014-03-25T17:27:12Z")
> [@PastTense](#): > > Astro: I would challenge or anyone else here to keep track of your individual expenditures for this type of stuff for a certain period of time and compare each item with Amazon prices. > > I think you will find a quite large number of these items you actually buy are $1, $2, $3 and these items either aren’t available on Amazon or the prices hugely jacked up. > > Anyway please give us some data. Yeah, food, sundries, and household goods are things I never buy online because they’re so much cheaper to buy locally. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [March 25, 2014, 5:45pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/29 "2014-03-25T17:45:26Z")
> [@ISiddiqui](#): > > And, some things ARE cheaper at local stores - such as toiletries. I know Amazon has gotten into them recently, but their prices are pretty high compared to the local brick & mortar stores for them. Yes, there’s a bottom tier of goods that may never be competitive in online ordering except from a full-out “grocery basket” provider… and AFAIK all of those have failed or are limping along. But we do buy a rather pricey seborrhea shampoo in a conveniently large size at considerable savings from Amazon. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [March 25, 2014, 5:58pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/30 "2014-03-25T17:58:06Z")
> [@Evil\_Captor](#): > > Amazon is certainly beating the brick and mortar stores. A few months ago I wanted to buy an HDMI cable. I priced it at Target and Radio Shack, it would have run me about $25 or $30. Then I checked on Amazon. As low as seven bucks. Even without Prime shipping it would have been a deal, WITH Prime shipping it was a deal and a half. Not to hijack this, but when it comes to cables (and I’ve never looked at Amazon), take a look at monoprice. I get all my cables there. I just picked up a 20 foot ethernet cord for about $3.00. When I set up my home entertainment center and needed a bunch of cables I got something like 5 HDMI cables AND two day shipping for less than one HDMI cable at Best Buy. If I didn’t need them in a hurry it would have been even cheaper to not have used two day shipping. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 25, 2014, 7:15pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/31 "2014-03-25T19:15:08Z")
A couple of years ago, Amazon bought a company called [Kiva Systems](https://en.wikipedia.org/wiki/Kiva_Systems), which makes robots for automating warehouses. I was trying to imagine how a robot could possibly pick all of the merchandise off the shelves. But Kiva’s approach is instead to use to the robots to move an individual shelf next to a person, who would retrieve the desired item from it. Currently, I imagine that their packers have to run all over the warehouse retrieving goods. It must be exhausting. ---
**Author:** ![RaftPeople](https://avatars.discourse-cdn.com/v4/letter/r/6f9a4e/32.png) [@RaftPeople](https://boards.straightdope.com/u/RaftPeople)\ **Post date:** [March 25, 2014, 7:55pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/32 "2014-03-25T19:55:58Z")
> [@Dewey\_Finn](#): > > A couple of years ago, Amazon bought a company called [Kiva Systems](https://en.wikipedia.org/wiki/Kiva_Systems), which makes robots for automating warehouses. I was trying to imagine how a robot could possibly pick all of the merchandise off the shelves. But Kiva’s approach is instead to use to the robots to move an individual shelf next to a person, who would retrieve the desired item from it. Currently, I imagine that their packers have to run all over the warehouse retrieving goods. It must be exhausting. They use a variety of methods to reduce the walk for specific orders. One method is for orders to be batched together such that the pickers are only picking skus from the batch that are in their area, placing items on the conveyor which routes them to sorting stations where the items are scanned and placed into cubbies that represent each order. Packers on the other side of the cubbies pull the units from completed cubbies and pack them for shipping. The kiva robots are pretty cool, but as with all of these types of optimization, there is no one perfect solution. The downside to the robots is that your capacity is determined by the number of robots. With humans, you can just hire a bunch of extra temps during the busy season, with robots you need the max number of robots that you will need during the busy season. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 25, 2014, 8:14pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/33 "2014-03-25T20:14:45Z")
> [@RaftPeople](#): > > They use a variety of methods to reduce the walk for specific orders. > > One method is for orders to be batched together such that the pickers are only picking skus from the batch that are in their area, placing items on the conveyor which routes them to sorting stations where the items are scanned and placed into cubbies that represent each order. Packers on the other side of the cubbies pull the units from completed cubbies and pack them for shipping. > > The kiva robots are pretty cool, but as with all of these types of optimization, there is no one perfect solution. The downside to the robots is that your capacity is determined by the number of robots. With humans, you can just hire a bunch of extra temps during the busy season, with robots you need the max number of robots that you will need during the busy season. Upsides of robots: 1. They don’t need sleep. A robot factory could go 24/7. Basically, one robot does the work of three humans just on that basis alone 2. Robots don’t quit 3. Robots don’t get pregnant 4. Robots don’t take vacations 5. Robots don’t ask for raises 6. Robots don’t have any emergencies 7. Robot’s don’t take breaks, or need them I would say “robots don’t get sick” but they do require maintenance and parts do break. So … there are a lot of reasons why Amazon might be VERY interested in robots. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [March 25, 2014, 8:45pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/34 "2014-03-25T20:45:59Z")
Amazon isn’t in the profit business. It is in the growth business. It puts a huge amount of income into getting larger. So the worth of the business increases at a pretty good clip. If you are a stockholder, you should be happy that your shares are owning more and more warehouses, server farms, etc. Almost all companies in the growth business fail after a short while because the growth in their market segment cannot be maintained. It’s pretty clear that Amazon’s market segments are not about to hit any limits. So it will continue to work for them for a pretty good chunk of time. Amazon is entering the 600lb gorilla stage and so it’s starting to do things like increase Prime membership. But they still have things like Netflix and eBay to worry about so they don’t increase too many costs too fast. So ignore Amazon’s profitability. For a while more anyway. ---
**Author:** ![Projammer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/projammer/32/559_2.png) [@Projammer](https://boards.straightdope.com/u/Projammer)\ **Post date:** [March 25, 2014, 9:14pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/35 "2014-03-25T21:14:13Z")
> [@Stranger\_On\_A\_Train](#): > > Sure, except most of these warehouses are not owned or operated directly by Amazon; they’re owned or operated by subcontractors to Amazon which get paid on a Net 30 or longer terms from time of sale. I’m going to need a cite on that. Everything I find indicated that Amazon has owns and operates their own facilities. [Why Amazon is on a Warehouse Building Spree](http://www.businessweek.com/articles/2013-08-29/why-amazon-is-on-a-warehouse-building-spree) (August 29, 2013) > [@](#): > > For a company whose showrooms are all online, [Amazon.com](http://Amazon.com) spends a staggering amount on bricks and mortar. The e-commerce giant has invested roughly $13.9 billion since 2010 to build 50 new warehouses, more than it had cumulatively spent on storage facilities since its 1994 founding, bringing the total to 89 at the end of 2012. (It’s announced five more in the U.S. this year.) ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [March 25, 2014, 9:18pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/36 "2014-03-25T21:18:33Z")
> [@Projammer](#): > > I’m going to need a cite on that. Everything I find indicated that Amazon has owns and operates their own facilities. Sounds more like Wal\*Mart, to be honest… even outsourcing their own job and screwing the provider. ---
**Author:** ![RaftPeople](https://avatars.discourse-cdn.com/v4/letter/r/6f9a4e/32.png) [@RaftPeople](https://boards.straightdope.com/u/RaftPeople)\ **Post date:** [March 25, 2014, 9:30pm UTC](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499/37 "2014-03-25T21:30:47Z")
> [@Evil\_Captor](#): > > Upsides of robots: > > 1. They don’t need sleep. A robot factory could go 24/7. Basically, one robot does the work of three humans just on that basis alone > 2. Robots don’t quit > 3. Robots don’t get pregnant > 4. Robots don’t take vacations > 5. Robots don’t ask for raises > 6. Robots don’t have any emergencies > 7. Robot’s don’t take breaks, or need them > > I would say “robots don’t get sick” but they do require maintenance and parts do break. So … there are a lot of reasons why Amazon might be VERY interested in robots. I don’t disagree with any of that, and I think it was a good purchase for Amazon, and I think they will continue to deploy them (I think they are in about 3 DC’s right now, they are working on getting them to operate well in a multi-level environment). [Previous page](https://boards.straightdope.com/t/someting-i-dont-get-about-amazon-prime-100-annual-shipping-deal/684499.md?page=1)