Amazon.com is pulling out the stops this month with a new monthly Prime membership.
The $7.99 monthly service includes access to Amazon.com’s library of streaming video content. By adding a monthly option, Amazon’s positioning it as more of a direct competitor to the video services of Netflix and Hulu Plus with similar monthly fees.
But access to a pool of online video is just one component of Amazon’s Prime service. Prime is mostly designed to encourage frequent shopping at the site, by providing “free” two-day shipping to subscribers as well as the video service and access to Kindle loaner material.
Adding a more accessible monthly Prime option just before the busiest retail season of the year could substantially boost Amazon’s merchandise sales.
It will especially appeal to careful shoppers who figure out that they can now pay just $7.99 and get free two-day shipping on all the gifts they buy at Amazon.com.
The strategy may be expensive for Amazon, though. The company assumes more shipping costs with Prime, but as an annual program, it enticed people to become more regular, long-term customers.
Amazon’s still offering annual $79 Prime memberships, which works out to $6.58 per month.
Now, with the monthly program, Amazon’s offering a lower barrier to entry. Customers who start with a monthly plan and get hooked will have to remember to switch to an annual plan or they’ll end up paying more than annual subscribers.
A spokeswoman offered a typically limited comment:
“Thank you for reaching out. We are always looking at ways to improve the shopping experience for our customers. We are testing a monthly Amazon Prime subscription. Beyond that we don’t have anything further to offer.”
We’ll have to see if Costco responds by testing a monthly membership to boost holiday traffic in its warehouses and on its web site.