Amazon is testing the waters for consumer loyalty with its $20 price hike to Amazon Prime. The increased subscription could add $150 million to the retailer’s bottom line according to analysts with Piper Jaffrey, but at least one recent survey shows some shopper backlash.
The online retail titan recently announced it would raise annual subscription rates for Amazon Prime from $79 to $99 this year. The rate increases on the consumer’s anniversary date. Prime has been loved by millions because it offers free 2-day delivery on thousands of products shipped right to the front door. It also affords members unlimited streaming of 40,000 movies and TV episodes and more than 500,000 Kindle titles which can be borrowed at no additional charge.
But the hefty rate increase did not set well consumers, according to a survey by Brand Keys which reports shopper backlash may have been more severe than expected. The Brand Keys research found brand engagement and customer loyalty for Amazon took a hit immediately following the rate increase announcement. Amazon's rating fell from 93% to 83% following the price hike.
Robert Passikoff, president of Brand Keys, said perhaps Amazon underestimated the negative perception of the increase. He said consumers are always expecting more, and when it comes to online retail they operate in a “what-have-you-done-for-me-recently” paradigm.
Brand Keys reports Amazon has been ranked the number one online retailer in its loyalty study for the past 16 years. But for now, at least among the Prime audience, Amazon ranks third behind Ebay and Overstock.com.