The other day I found myself buying a $23 cookbook in order to get free shipping on a DVD that costs $4.99, and it got me thinking about the absolute brilliance of Amazon’s business model. Let’s consider:
- Lots of stuff, relatively cheap. When I started using Amazon, they were only selling books, music, and DVDs. Now, of course, they have everything under the sun, and though about 70% of what I buy is books, their prices (and their free shipping – we’ll get to that, it’s a devious little cycle) make me check Amazon first for almost anything before I consider comparison shopping. I’ve purchased tea, cooking supplies, DVDs, and even the plastic wrap to weatherproof my windows from Amazon.
- The free shipping model. Okay, so once you have a shitload of stuff that people will want to buy, at reasonable prices for the most part, you start offering free shipping on orders over $25. We don’t really think about this, because it’s so ingrained now, but it’s freaking brilliant. With other stores, I’ll see a free shipping deal for orders over $40 or $50 and think it’s silly, too much money, and not buy anything at all (partly because of what I’ve come to expect from Amazon). But $25 isn’t bad. What’s more, for a lot of books, it’s more than the price of a book, but not much more, so you think “hey, if I buy just one more book, I’ll get free shipping!” Over time, you get hooked on this system, and you come to expect free shipping. So you do things like buy a $23 book to get free shipping on a $4.99 DVD. And what’s more, you stop comparison shopping, because other stores don’t offer the free shipping.
- Personalization. This is the nail in the coffin, and I admit that it’s been killing me lately. Amazon now has all these features – wishlists, listmania, personalized deals, recommendations, etc., that make you want more stuff, and then conveniently keep track of the stuff you want so that it’s available when you want to add an item to get that free shipping. Whenever I’m shopping and come up short of the $25, I go immediately to my wishlist, and find something to add, which usually brings me up to $30 or $35. Everybody wins. On top of that, when I get bored in class I start playing with recommendations, and end up clicking the fatal deals link, which gives me not only gold box deals (the culprit that made me pay $115 for seven seasons of the West Wing – but so worth it), but also personalized deals. I don’t think they actually cut much off the price, but they usually are pretty good, and I often find myself saying “ooh, 15% off? Gimmee.”
So good job, Amazon. You’ve converted a nice freebie into what’s practically an internationally recognized right. (You have no idea how painful it was to live in Ireland and be ineligible for free shipping on Amazon.co.uk.) I salute you.