Should you continue to pay for Amazon Prime during the pandemic?

While Amazon.com (NASDAQ: AMZN) offers Prime members plenty of perks for the fee of $ 119 per year, including access to movies, music, books, groceries, etc., the main reason consumers are enroll in the program is to get free shipping.

The promise of two-day, then one-day, and now even same-day, hour-long shipping has proven too appealing for many not to sign up. Even for those who don’t order a lot online, the benefit of fast delivery is powerful when you add the other perks on offer.

But what about during this pandemic? As the COVID-19 outbreak escalated, Amazon priority shipments of essential products and extended delivery times for other goods, sometimes up to two weeks or more.

This begs the question of whether a consumer should keep their Prime membership when Amazon breaks its promise, even though it is a temporary situation?

A force for change

Amazon Prime was a revolutionary concept in its early days, promoting two-day delivery guarantees. It helped accelerate the growth of the e-commerce giant and became the industry standard, followed by Walmart (NYSE: WMT) and Target (NYSE: TGT).

The service even helped Amazon grow its third-party platform by allowing even small businesses to compete with bigger rivals by participating in the Fulfilled by Amazon program. The program allows businesses to ship their goods to Amazon warehouses where they are shipped to customers when an order is placed.

Yet even that has been sidelined by the coronavirus pandemic, as Amazon has placed such orders on the back burner so it can secure shipments of N95 masks, respirators, hand sanitizer, and more.

But expensive

The number of paying members climbed to 150 million worldwide at the end of 2019, an incredible 50% increase from the previous year. While a number of new accounts have likely signed up just to take advantage of the fast delivery over the holidays and intend to cancel when the trial program ends, these are still a considerable number of people.

But Prime is not cheap for Amazon. The company spent $ 38 billion on shipping last year alone, up 37% from a year earlier, and costs soared 43% in the fourth quarter. Even if the 150 million members paid $ 120 a year – which they don’t, as there are discounted subscriptions for students and those on government assistance, and others might pay monthly – this would only generate $ 18 billion in revenue for Amazon, suggesting that the membership program could increase their annual membership fee again.

So unless you are purchasing an essential item, should you keep your Amazon Prime membership?

If you use Prime’s other services, such as regularly watching Prime Video, listening to Prime Music, or storing photos on Prime Photo, keeping your subscription is an easy decision. JPMorgan Chase estimates that the value of all of Prime’s services is actually worth $ 784, which makes the $ 119 fee a steal.

For everyone, this is an enigma.

You can’t always get what you want

Amazon is not honoring its end of the deal, and while the reasons are quite understandable, Amazon is not a charity. A friend of mine decided it was an easy call: he canceled his Prime membership.

Even though he likes what Amazon is doing and has Echo speakers scattered all over his house, which apparently work completely on Alexa. virtual assistance capabilities, he doesn’t watch Amazon Video, listen to its music channels, or read books on a Kindle. He’s a Prime member for fast delivery and he doesn’t get it, and he says two-week delivery is available from any fly-by-night operation.

When he called to cancel, however, the Amazon rep recommended that he suspend his membership, as he intends to restart when the fast shipping resumes (Amazon has actually credited six months of service to his account. banking). For others who only use Prime for free shipping, they may also want to cancel their service.

While Amazon has done a lot of good by changing the way we shop, consumers don’t have to stay loyal when a company isn’t delivering for us, literally and figuratively. We should take our business somewhere else – or at least put it on hiatus until the online retailer comes back for us.