Despite a volatile October, Amazon (NASDAQ: AMZN) is still one of the strongest stocks on the market. Despite shedding value throughout the last month, long term investors are still on top, as it’s stock has risen 40.47% in the year so far, and 45.01% since this time in 2017.
Investors have received some good news this week as we approach the second half of the final quarter of 2018. Amazon has confirmed free shipping for all U.S. orders for the holiday season, which could help to increase sales and drive revenues for a historic quarter.
Amazon Eliminates $25 Free Shipping Minimum
On Monday, Amazon told investors and the public that free shipping will be offered throughout the entire holiday season, no matter the value of the order. Previously, shipping was only offered on purchases valued at $25 or higher.
The decision will lead to increased revenue as impulsive shoppers will be more inclined to make purchases. According to research, a free shipping promotion can have a huge influence on whether a consumer chooses to purchase online or in-store.
Some studies have also shown that consumers prefer free shipping over discounts, so it could have just made the smartest move of the holiday season.
Free Shipping May Upset Prime Customers
Amazon Prime growth has been phenomenal this year, helping to push Amazon to its highest valuation in history. Prime is a service that ensures Amazon can generate revenue from consumers, even when they aren’t making purchases. Prime comes with many perks that add value for members, such as discounted music, unlimited streaming of Prime Video, and discounted channels.
However, prime also offers free same day delivery in major U.S. locations, and free two-day shipping everywhere else in the country. Prime members may feel disgruntled that free shipping will now be offered to all customers for the end of the year.
While the backlash is not likely to be major, it’s an interesting decision from Amazon and may in some small way erode trust from loyal customers.
Free Shipping is Costly for Amazon
Throughout 2017, Amazon spent $21.7 billion on shipping and logistics. With this year’s free shipping promotion, the company is likely to break that record.
Ultimately, the company expects that revenues will more than offset the shipping costs, making for a more profitable holiday season. Investors will need to watch the figures closely after the Oct-Dec quarter, to determine whether the gamble pays off.
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