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Amazon raises minimum purchase order to $49 for free shipping eligibility

Zoom in font  Zoom out font Published: 2016-02-26  Views: 28
Core Tip: Online retailer Amazon has increased minimum order size for customers from $25 to $49 to qualify for free shipping.
Online retailer Amazon has increased minimum order size for customers from $25 to $49 to qualify for free shipping.

The move is meant to attract as many customers as possible into its Prime membership program, which costs $99 a year.

Amazon expecting that hiking the prices will prompt customers to buy more items to avail the free shipping.

Prime service is meant for frequent shoppers, giving them access to other services such as online movies, music, and other content, thereby retaining customers within Amazon's shopping sphere, reported Bloomberg.

Amazon also intends to minimize costs and enhancing profits on each sale by increasing spend on order size of non-Prime customers.

Under the free shipping service, items ordered would be delivered within five to eight business days. The time frame however differs for pre-ordered items, reported Techtimes.com.

Amazon's new minimum order size for free shipping comes a year after the retailer spent $5bn in net shipping costs, which represented a 19% increase over the previous year.

The figure accounted for around 5.1% of total sales, with shipping costs climbing higher, the publication reported.

Amazon's new threshold for free shipping aligns it with Wal-Mart's online store, which has a threshold of $50, or free pickup in stores. Target also seeks a $25 minimum order, while startup Jet.com puts its stakes higher at $35, Bloomberg reported.

Last month, Amazon announced plans to acquire French shipping company Colis Privé in order to compete with major shipping companies such as United Parcel Service, FedEx and DHL.

The online retailer already owns 25% of the French package delivery company, a stake which it had acquired in 2014. Amazon has set its eyes on the remaining 75% too.

This move is seen as part of the online retailer's broader plan to own and manage shipping services and cut down dependence reliance on others.
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