This week in Amazon news, Amazon’s stock tumbles as sales growth slows, another state starts collecting sales tax, and Amazon Prime considers a price increase.
Keep reading to find out more.
Amazon’s Stock Tumbles!
Amazon released their 4th quarter earnings report on January 30th and didn’t quite live up to expectations. Operating costs for the quarter climbed 25% to just over $25.1 billion. Revenue didn’t increase quite that fast, growing 20% to $25.6 billion.
After the announcement, Amazon’s stock dropped by more than 11%!
What does this mean? It could be a sign that Amazon is going to have to start becoming more profitable in the short-term and that investors are running out of patience with Amazon’s ultra long-term vision.
But how can Amazon increase profits? That takes us right into our next story.
Amazon Prime Price Hike
Amazon Prime was introduced in 2005 at a yearly price of $79.
If you were to graph how Prime’s price has changed since then, it would look like this:
2005 _______________ 2014
That’s it. A flat line. It was $79 a year in 2005 and it’s $79 a year now in 2014.
But now, on their earnings call, Amazon announced that they’re planning to increase the price by between $20 and $40 per year. The timeline for the increase is unclear, but I’d be surprised if Prime is still $79 on Halloween.
How will customers react? If this article is to believed, many won’t care. It seems as thought that many customers are so loyal to Prime and believe that it saves them so much time and money that they’d consider it a bargain at twice the price.
Even at to $300 a year, he would still save money.
“It really wouldn’t change my habit. I rarely go into any brick and mortar stores these days.”
Of course, not everyone will feel this way. And that raises the question, does Amazon care? Do they want customers who aren’t loyal and who aren’t completely on board with Amazon’s ecosystem? And if Prime membership drops, does Amazon even lose money?
What do you think? Will you be canceling your Prime membership if the price goes up? Personally, I think I’ll pay somewhere around $100 a year, mostly for the streaming video. I don’t order as much as I used to and find I enjoy Amazon’s streaming service as much as Netflix.
North Carolina Collects Amazon Sales Tax
Sales tax remains one of the most controversial and most reported-on Amazon issues today. Entire companies, like our friends at Tax Jar, have started just to help Amazon sellers make sense of the mess.
And honestly, I still don’t get it. When do sellers have nexus? What if Amazon moves inventory without telling me? How can I possibly know to collect sales tax? Does collecting sales tax help or hurt Amazon?
But, as of February 1st, Amazon is collecting sales tax on purchases made in North Carolina. That makes 20 states so far. Amazon hasn’t commented on why they’re making the change now.
What do you think? I’m betting on Amazon building a new fulfillment center in North Carolina in the next year or two. “Giving in” on sales tax may gain them favors in the community, which could lead to property tax abatements or other political favors.