Amazon Prime Price Test May Be Testing A Lot More Than You Thought
Amazon's decision to begin testing a $7.99 monthly price for Amazon Prime is at least as interesting for how Amazon is doing the test as it is for the test itself. The new price was spotted by a blogger on Monday (Nov. 5) without any announcement from Amazon, which will only confirm that it is testing a monthly price. But Amazon has made the pricing option tricky for customers to find, if it's offered at all. Click one Amazon Prime link, and you may be offered $7.99 a month; click a different link, and the price is $79 a year.
Which raises an interesting question: What exactly is Amazon testing here?
It's obvious that Amazon is trying to price-match its competitors Netflix and Hulu Plus, which both also offer $7.99-a-month subscriptions. A big part of Amazon Prime is the unlimited free streaming video feature.
But the timing of the monthly subscription offer—just at the start of the holiday selling season, when joining Prime for only a month or two could be very attractive to some customers—suggests that Amazon also wants to see how many customers will think of Prime as something they only use for the short term. Offering a flat $8 fee for free holiday shipping? That's an interesting test, too, one that opens the door to short-term use of Amazon's same-day shipping where it's available.
Even more interesting is how customers have to find the monthly price. After clicking on the "Join Prime" link at the top of the homepage, some customers are offered the $7.99 monthly price, but some aren't. As soon as a customer signs into his or her Amazon account, the $7.99 price shows up. But clicking on the "Amazon Prime" link at the bottom of the homepage consistently generates a $79 annual price, and that's also the price listed in the FAQ.
If this were a few years ago, this discrepancy would look like a badly designed test guaranteed to generate very muddy results. When the price a customer is offered changes depending on so many factors (including which path the customer follows to get to the price), it's hard to extract clear answers about the best way to get customers to buy. (And, remember, Amazon still insists that it doesn't do differential pricing—even when it has to.)
But these days, Amazon has the ability to closely track exactly how customers navigate its sites at a very fine-grained level. Is Amazon using that ability to simultaneously track pricing offers, customer paths on the site, when customers log in and how they respond to a new offer in different contexts? With enough data, Amazon might be able to draw some very complicated conclusions about how to present pricing options.
Is that what Amazon is actually testing? If it is, that Amazon no-differential-pricing pledge may be about to go out the window—and everyone else in E-Commerce may need to improve their own online pricing game a lot.