But you might be paying more than the annual fee for this privilege.
A comparison of 65 household products on Amazon’s and Walmart’s online stores found that Amazon was, on average, $6.43 more expensive than Walmart. Pacific Crest, who performed the comparison, thinks this premium has to do with the cost of two-day shipping.
While Amazon Prime has an annual $99 subscription fee, the cost of shipping is rising for the company.
At Amazon, the cost of fulfilling customer’s orders rose 24% in 2015, according to Edward Yruma, analyst at Pacific Crest, and his team. To combat this, Amazon has been placing restrictions on some items, forcing customers to either add the items to an order or $25 or more, or receive them in 4-5 days, rather than two days. Additionally, Amazon is also factoring shipping costs into the prices of some of its items.
These restrictions on shipping are aimed at reducing costs at Amazon, but makes shopping at the retail outlet more expensive than at other competitors.
Walmart has started offering “ShippingPass,” a two-day free shipping subscription service that costs $49 per year. Amazon Prime started at $79, but has since increased in price, while offering additional perks like streaming music and video. Yruma thinks that Walmart will have to follow Amazon’s lead and eventually increase the price of ShippingPass to offset the cost.
Amazon is still an incredibly popular online shopping destination, as page views per user and time on site are both up compared to last year, according to data from Alexa.com.
Yruma says ShippingPass “deserves close monitoring” for Amazon investors as the service begins to encroach on Prime’s dominance in the space. But it is yet to be seen how the service is adopted.
Pacific Crest rates Amazon a buy and set a price target at $820.00, almost 11% higher than the current share price. Amazon stock has risen nearly 17% so far in 2016.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
Business Insider Emails & Alerts
Site highlights each day to your inbox.