Spending

A record 118 million people are paying for Amazon Prime during the pandemic — here are the pros and cons

Twenty/20

As the pandemic upended the economy this spring, many Americans have been looking for ways to cut costs. The desire to save money, however, does not seem to have translated to shoppers canceling their Amazon Prime memberships.

The number of Prime memberships has continued to grow, according to Consumer Intelligence Research Partners. In March 2020, a record 118 million people were paid Amazon Prime members, up from 109 million a year before, according to CIRP data. 

Those with an Amazon Prime membership either pay a monthly fee of $12.99 or a yearly fee of $119. The fee typically includes expedited shipping on a a wide variety of products, along with access to the Amazon Prime Video streaming service and other perks.

Some say this may not be an ideal way to spend your money right now. "Considering most people are struggling financially, I do not think this is a necessary expense to take on," says consumer savings expert Andrea Woroch. 

Other customers, however, remain happy with their memberships and what they get for their money. 

Here's what experts and shoppers say about the value of Amazon Prime right now, and why the increase in subscriptions might not reflect how useful Amazon Prime actually is at the moment. 

Shipping delays make Prime less valuable for some

Usually, Prime members can expect fast, free shipping, with more than 1 million items available for same-day delivery, if the total is more $35 or more.  But now, items are taking more than the one-day, or even two-day, shipping that Amazon once promised. 

Whether a membership to Amazon Prime is worth it for you can depend on how much you care about those shipping delays. To some members, slow delivery makes Amazon Prime less appealing. On Twitter, some shoppers are expressing their frustration with paying for a membership that promised two-day free shipping when their packages now take longer to arrive. 

Woroch has been using Prime for specialty items she doesn't need right away. When she needs household items fast, she uses other services. "I think Target and Walmart have been doing a great job at offering fast delivery and drive-up delivery services — I've used Target's multiple times — so that's what I've been using more than Amazon Prime for everyday household items."

Likewise, Will Putzier, 27, a graduate student living in Salina, Kansas, uses Amazon Prime less than he did before the pandemic. Fast shipping was one of the primary reasons to pay for Amazon Prime before, but now, he says, a membership "is probably less worth the fee, as the urgency for most things is reduced." 

Putzier finds that all he really needs he can get from the grocery store. He is ordering less from Amazon, and the items he is ordering — chili lime powder, for example — don't require superfast shipping. "I am trying to spend less money, and activity restrictions mean there are fewer things besides necessities that I need," he says.

Other shoppers, however, say they don't mind factoring in the delays when making shopping decisions.

Hailey Ledford, 28, an insurance underwriter in Philadelphia, has been ordering from Amazon more since the pandemic. She uses her Amazon Prime account to buy essentials like toilet paper, she says, as well as impulse purchase like toys for her 2-year-old daughter to "keep her busy." 

To her, the reliability of shopping on Amazon is still worth the fee to not pay extra shipping costs, even if items take a little longer to arrive. "Shipping has slowed down," says Ledford. "It takes an extra three to four days usually. It's a pain but we understand." 

Having access to Amazon Prime might increase your spending

Amazon can encourage unnecessary spending, says money coach Bernadette Joy. "I myself have fallen into this, having bought a vegetable slicer and some silicon brushes that I totally thought I would use more often when cooking at home," she says. "I have used the vegetable slicer twice and the brushes never."

Plus, returns are no longer convenient, which can change the calculation. Items take a longer time to get to you, so by the time you get them, you might not want them anymore. Because they are harder to return, though, you might end up keeping whatever you bought. 

"I used to return to a local Kohl's, which would be free, but returning items is more of a hassle now," she says. "In the long run, it's costing us more by spending on things we don't need." 

Returning items is more of a hassle now. In the long run, it's costing us more by spending on things we don't need.
Bernadette Joy
money coach

If you're going to spend money on less essential items, you might choose to do so at a local business instead these days. Almost 60% of small businesses say their revenue decreased by more than 75% because of the coronavirus, according to a Main Street America survey of more than 5,850 small businesses.

"Many of us, we purchase things online from Amazon," says Will Campbell, CEO of digital entertainment and marketing agency Quantasy. Instead, he suggests, "take a couple more minutes to see what [small] businesses in your area might have the same product," and order what you need from them.

By shopping local, you can stimulate the economy while patronizing the shops that are most affected by, and most in danger from, the pandemic. 

Is Prime worth it to you? How to decide

More people may have Amazon Prime subscriptions now by accident, because consumers tend to forget to cancel after their 30-day trials, says Josh Lowitz, partner and co-founder of CIRP.

"Our data shows that the conversion rate from 30-day trials to continuing to pay is higher," Lowitz says. That means more consumers are sticking with Prime and choosing to pay for it. The retention rate of those with a 30-day trial has increased from 65% last quarter to 70% this quarter, according to CIRP data. 

That's great if you've decided you like Prime, but less so if you've fallen for the common pitfall of forgetting the cancel a subscription before the free trial ends. Set a reminder on your calendar or phone to remind you to cancel if you don't want the service.

If you'd pay more in shipping either on Amazon or on other sites than the $12.99 a month you'd pay for Prime, buying a membership might be the financially savvy option, especially if you don't mind waiting a little longer to get the items you want and if you actually use the other perks that come with your membership. Try to make sure that you're only buying what you're sure about, too, so you don't have to deal with returns.

The annual fee for Prime is also 24% less expensive, so if you have the cash and you want to stick with Amazon, you'll get a better deal paying all at once rather than month by month.

But if you started a trial and aren't using the service all that much, don't hesitate to cancel. Remember, what you spend online could "be better put to use in savings or paying off debt," Joy says. "The ease of Amazon Prime makes [spending] very tempting."

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