‘“All-you-can-eat” express shipping.’1 This is how Jeff Bezos described Amazon Prime when it launched back in 2005. The idea was simple – shoppers pay an annual fee in exchange for unlimited two-day shipping. No longer would customers have to worry about consolidating orders or minimum purchase requirements. Bezos wanted fast shipping to become an everyday experience rather than an ‘occasional indulgence’.2
The company had already been offering Super Saver Shipping, which catered to those time-rich customers who didn’t mind waiting a bit longer for their orders to arrive (this still exists today, but is just called free shipping). This set the stage for new delivery services such as Prime, an idea first proposed by Amazon engineer Charlie Ward. In his book, The Everything Store, Brad Stone writes:
Why not create a service for the opposite type of customer, Ward suggested, a speedy shipping club for consumers whose needs were time sensitive and who weren’t price conscious? He suggested that it could work like a music club, with a monthly charge.3
Amazon is no stranger to risk taking, and this was quite a gamble. Not only would the promise of unlimited two-day shipping disproportionately raise customer expectations and add significant cost pressure, particularly in the short term, but were customers willing to pay for the privilege of shopping with Amazon? Sure, warehouse clubs like Costco were charging a membership fee – but this was recouped in the form of lower prices instore. Could Amazon convince shoppers that fast shipping alone was worth the initial $79 fee?