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Amazon.com raised the annual price of its Prime membership by $20 to $99 in the US on Thursday hoping that the hike will help it meet increasing shipping costs.
The Prime programme, first introduced in 2005, offers customers free two-day shipping on most items purchased from Amazon.com. Members also get free access to streaming video content. Thursday’s price hike was the first since the programme was introduced.
In its letter to customers explaining the price increase, Amazon said that 20 million items are now eligible for free shipping, up from 1 million in 2005.
The move is seen as risky for Amazon as it tries to raise its razor thin profits after years of attracting buyers with rock bottom prices and free shipping offers. While the price hike will trim Amazon’s losses on shipping it may also drive away shoppers unhappy at the higher membership price.
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