February 12, 2015
Studies claim Amazon Prime members have delivery issues
Amazon is having some difficulty living up to its promise to deliver packages in two days to Prime members, according to two new research studies.
A poll of 1,700 Amazon shoppers last month by Reuters/Ipsos found 10 percent of those who chose two-day shipping between Nov. 1 and Dec. 31 failed to get their packages on time. Even with this, 96 percent claimed to be happy with the Prime service.
Greg Greeley, who heads up the Prime program at Amazon, called the Reuters/Ipsos numbers "very suspect." An unidentified spokesperson told Reuters that Amazon’s own data "shows significantly better results."
A separate study conducted by Bizrate Insights found 21 percent of Amazon Prime members agree they have received at least one order late. This is important, according to the study’s authors, because 9.6 percent of Prime members surveyed said they are considering not renewing their memberships because of late deliveries.
"Shipping club membership [beyond Prime] has grown significantly over the last few years, growing 36 percent year-over-year among Cyber Monday shoppers in 2014 over 2013," said Hayley Silver, VP of Bizrate Insights, in a statement. "The growth rate has slowed when compared to 2013 over 2012, which was up 53 percent year-over-year among Cyber Monday online buyers. Listening to consumer sentiment in January 2015, there is dissatisfaction that may lead to non-renewal by over 40 percent of members — one quarter of which is specifically due to late deliveries."
BrainTrust
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Discussion Questions
Can Amazon afford to lose up to 10 percent of its current Prime members on a yearly basis? Do you expect Amazon will be able to raise the performance bar for its Prime delivery program?
Poll
If there is a problem with Prime deliveries, I expect that Amazon will work hard to fix it. The company is experimenting with alternative delivery companies and state-of-the-art technology in its warehouses. Will they get every order right? No. But I doubt this will lead to mass defections from Prime. Prime is much more than two-day shipping. And Amazon has worked hard to make Prime more attractive and sticky.
As for the studies: The Reuters/Ipsos study found that consumers are happy with the service, regardless of late shipping. The Bizrate study focused solely on Cyber Monday numbers and what consumers say they will do, versus what they actually do. Bizrate should know better.
Live by the sword, die by the sword. Delivery the last mile to the consumer on time is a critical value proposition for online, especially Amazon Prime.
In the early days of Amazon Prime, there was less competition for the available shipping services in the U.S. Even though Amazon is piloting some creative shipping with USPS, everyone online is touting quick shipping. There very well may not be the capacity to deliver on time during the holiday season.
Amazon has done a good job of adding value options (e.g., movies, original content) to Prime memberships. But at the core, Prime is still about shipping on time. Given the current financial reports, Amazon can not afford to lose 10 percent of its members every year.
I believe 10 percent is a high churn number for a premium service. The expectation for promised service should be very high and it should be met at the highest level possible. The report is surprising and unacceptable. The only acceptable “drop out” reason from Amazon’s management’s point of view is that the shopper didn’t use the service.
My experience during that period of time is quite to the contrary. Just about all our holiday shopping was on Amazon and we not only had no late deliveries, in a few cases we got next-day delivery without asking for it. We even got Sunday deliveries.
While losing 10 percent of Prime members per year would make a significant impact on Amazon, I don’t anticipate it being catastrophic or even all too alarming. Amazon has done a great job of diversifying their programs—they have not just Prime but Subscribe, Amazon Mom, Amazon Student and Amazon Unlimited. They are even offering same-day delivery in some major cities. Amazon does need to put a greater focus on insuring they deliver on their promises, shipping or otherwise, and given their constant improvements I think they are more than capable of solving whatever may cause late deliveries.
As other retailers embrace accelerated shipping and offer other fulfillment options (click-and-collect, GoogleExpress, Instacart, etc.), Amazon’s risk from missing deadlines (and it has happened to me on several occasions, particularly when Amazon uses USPS) becomes a bigger threat to Prime renewals. Although Amazon is trying to mitigate the threat by bolstering the Prime offer with additional services, my sense is that the freebies are more of an afterthought for subscribers rather than a renewal driver. The real investment to keep Prime members will be accomplished by adding more DCs to support not only free two-day shipping but also initiatives such as its foray into free one-day shipping for Amazon Student members at Purdue or Prime Now in New York City.
It’s going to have to. I’ve had a few late deliveries. I’ve also taken Amazon up on its credits in exchange for slower shipping, but I’ve stopped doing that because it’s not so easy to redeem them—definitely a process designed to discourage people from redeeming them. But I think shipping efficiency is a much bigger challenge for Amazon than speed. It’s ridiculous to order three things and get three different boxes. Three different boxes that collectively meant that Amazon shipped me a heck of a lot of air. Amazon has placed a bet that speed is a differentiator. But they can’t go on forever shipping fast without getting efficient, and these delivery misses to me speak more to the efficiency side of the equation than anything else.
Very few, if any, retailers can afford to lose 10 percent of their customer base. However, before other retailers rub their hands with glee that Amazon is losing steam in bringing these Prime members on board, I’ll offer these figures from the January, 2015 Prosper Monthly Consumer Survey:
21.6 percent of the 6,300-plus respondents reported they were Amazon Prime members. That compares to 20.2 percent of respondents in the January, 2014 survey. Those Amazon consumers, compared to the general population, are more likely male (52.5 percent), married (56.5 percent), are a younger average age (42.1 years), better educated (14.9 years), have a higher household income ($71,585), are more likely to have children in the household (41.9 percent), are homeowners (65.7 percent), are Hispanic (17.0 percent) and are active warehouse club members at BJs, Costco, or Sam’s Club.
Worth keeping in mind that these Prime members sign up for an annual, recurring fee.
Might want to paraphrase Twain’s comment when a newspaper wrote of his death, “The report of my demise has been greatly exaggerated.”
The study found that up to 10 percent of Prime members are CONSIDERING not renewing. My guess is that the majority of people will still renew.
To me though it is reminder that Amazon needs to focus on their core reasons for people to pay for Prime. All of the free streaming is fine … well actually most of it I could care less about, but they do need to deliver on the two-day shipping. Especially after raising the price by $20.
I don’t believe that Amazon will lose 10% of their Prime members over some late orders. On occasion it happens. But one late order won’t make a person leave the program, unless it happens frequently, which it doesn’t. Furthermore, Amazon will lose members, just as any business (or similar program to Prime) does. However, if you look at the numbers, new members exceed lost members. Those are numbers that I—and Amazon—like.
I agree with Gene—nearly all deliveries arrive on time or early. And when a delivery is “late,” it’s typically an Amazon seller fulfilled by Amazon and for some reason an extra day slips in. Perhaps Amazon can do a better job of alerting Prime members earlier in the ordering process? But overall, I’m really happy with Amazon Prime—use it all the time and absolutely plan to renew.
That said, I’m not especially happy with Amazon’s employment practices and hope they can become a leader in offering the best employment policies too. This is where Costco has leadership among major retailers.
The question isn’t really answerable without knowing how many people are coming in to replace those 10%. Since it’s still a growth market, the loss likely would result in a slower growth, not an actual reduction (and as has been pointed out, it’s 10% “thinking of” leaving, not actually doing so).
A cynic might think the surveys were either sponsored by rivals seeking to make the big A look bad, or by the surveyors seeking a name for themselves. If either of these is true, then they’ve been slightly successful…at least for now.
Potential churns are not yet churns and this leaves an opportunity to make those customers happy again. Sometimes there are external factors that get in the way, like bad weather. I agree that it’s important to alert customers as soon as possible if anything could potentially delay their delivery. I’m sure Amazon is going to correct these issues as soon as possible.
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If there is a problem with Prime deliveries, I expect that Amazon will work hard to fix it. The company is experimenting with alternative delivery companies and state-of-the-art technology in its warehouses. Will they get every order right? No. But I doubt this will lead to mass defections from Prime. Prime is much more than two-day shipping. And Amazon has worked hard to make Prime more attractive and sticky.
As for the studies: The Reuters/Ipsos study found that consumers are happy with the service, regardless of late shipping. The Bizrate study focused solely on Cyber Monday numbers and what consumers say they will do, versus what they actually do. Bizrate should know better.
Live by the sword, die by the sword. Delivery the last mile to the consumer on time is a critical value proposition for online, especially Amazon Prime.
In the early days of Amazon Prime, there was less competition for the available shipping services in the U.S. Even though Amazon is piloting some creative shipping with USPS, everyone online is touting quick shipping. There very well may not be the capacity to deliver on time during the holiday season.
Amazon has done a good job of adding value options (e.g., movies, original content) to Prime memberships. But at the core, Prime is still about shipping on time. Given the current financial reports, Amazon can not afford to lose 10 percent of its members every year.
I believe 10 percent is a high churn number for a premium service. The expectation for promised service should be very high and it should be met at the highest level possible. The report is surprising and unacceptable. The only acceptable “drop out” reason from Amazon’s management’s point of view is that the shopper didn’t use the service.
My experience during that period of time is quite to the contrary. Just about all our holiday shopping was on Amazon and we not only had no late deliveries, in a few cases we got next-day delivery without asking for it. We even got Sunday deliveries.
While losing 10 percent of Prime members per year would make a significant impact on Amazon, I don’t anticipate it being catastrophic or even all too alarming. Amazon has done a great job of diversifying their programs—they have not just Prime but Subscribe, Amazon Mom, Amazon Student and Amazon Unlimited. They are even offering same-day delivery in some major cities. Amazon does need to put a greater focus on insuring they deliver on their promises, shipping or otherwise, and given their constant improvements I think they are more than capable of solving whatever may cause late deliveries.
As other retailers embrace accelerated shipping and offer other fulfillment options (click-and-collect, GoogleExpress, Instacart, etc.), Amazon’s risk from missing deadlines (and it has happened to me on several occasions, particularly when Amazon uses USPS) becomes a bigger threat to Prime renewals. Although Amazon is trying to mitigate the threat by bolstering the Prime offer with additional services, my sense is that the freebies are more of an afterthought for subscribers rather than a renewal driver. The real investment to keep Prime members will be accomplished by adding more DCs to support not only free two-day shipping but also initiatives such as its foray into free one-day shipping for Amazon Student members at Purdue or Prime Now in New York City.
It’s going to have to. I’ve had a few late deliveries. I’ve also taken Amazon up on its credits in exchange for slower shipping, but I’ve stopped doing that because it’s not so easy to redeem them—definitely a process designed to discourage people from redeeming them. But I think shipping efficiency is a much bigger challenge for Amazon than speed. It’s ridiculous to order three things and get three different boxes. Three different boxes that collectively meant that Amazon shipped me a heck of a lot of air. Amazon has placed a bet that speed is a differentiator. But they can’t go on forever shipping fast without getting efficient, and these delivery misses to me speak more to the efficiency side of the equation than anything else.
Very few, if any, retailers can afford to lose 10 percent of their customer base. However, before other retailers rub their hands with glee that Amazon is losing steam in bringing these Prime members on board, I’ll offer these figures from the January, 2015 Prosper Monthly Consumer Survey:
21.6 percent of the 6,300-plus respondents reported they were Amazon Prime members. That compares to 20.2 percent of respondents in the January, 2014 survey. Those Amazon consumers, compared to the general population, are more likely male (52.5 percent), married (56.5 percent), are a younger average age (42.1 years), better educated (14.9 years), have a higher household income ($71,585), are more likely to have children in the household (41.9 percent), are homeowners (65.7 percent), are Hispanic (17.0 percent) and are active warehouse club members at BJs, Costco, or Sam’s Club.
Worth keeping in mind that these Prime members sign up for an annual, recurring fee.
Might want to paraphrase Twain’s comment when a newspaper wrote of his death, “The report of my demise has been greatly exaggerated.”
The study found that up to 10 percent of Prime members are CONSIDERING not renewing. My guess is that the majority of people will still renew.
To me though it is reminder that Amazon needs to focus on their core reasons for people to pay for Prime. All of the free streaming is fine … well actually most of it I could care less about, but they do need to deliver on the two-day shipping. Especially after raising the price by $20.
I don’t believe that Amazon will lose 10% of their Prime members over some late orders. On occasion it happens. But one late order won’t make a person leave the program, unless it happens frequently, which it doesn’t. Furthermore, Amazon will lose members, just as any business (or similar program to Prime) does. However, if you look at the numbers, new members exceed lost members. Those are numbers that I—and Amazon—like.
I agree with Gene—nearly all deliveries arrive on time or early. And when a delivery is “late,” it’s typically an Amazon seller fulfilled by Amazon and for some reason an extra day slips in. Perhaps Amazon can do a better job of alerting Prime members earlier in the ordering process? But overall, I’m really happy with Amazon Prime—use it all the time and absolutely plan to renew.
That said, I’m not especially happy with Amazon’s employment practices and hope they can become a leader in offering the best employment policies too. This is where Costco has leadership among major retailers.
The question isn’t really answerable without knowing how many people are coming in to replace those 10%. Since it’s still a growth market, the loss likely would result in a slower growth, not an actual reduction (and as has been pointed out, it’s 10% “thinking of” leaving, not actually doing so).
A cynic might think the surveys were either sponsored by rivals seeking to make the big A look bad, or by the surveyors seeking a name for themselves. If either of these is true, then they’ve been slightly successful…at least for now.
Potential churns are not yet churns and this leaves an opportunity to make those customers happy again. Sometimes there are external factors that get in the way, like bad weather. I agree that it’s important to alert customers as soon as possible if anything could potentially delay their delivery. I’m sure Amazon is going to correct these issues as soon as possible.