E-commerce major Amazon.com Inc. has reportedly increased the annual subscription price of its Prime service to USD 139 in the U.S., which is 17% higher than its previous rate. The move will help in offsetting the growing shipping cost and wages in the country.
It is the first time Amazon Prime subscription fee has been hiked since 2018, which provides members with some perks such as faster shipping and complete access to other Amazon services, including Prime Video. Sources claimed that more than 200 million people globally are paid members for the Prime service, with most of them belonging to the U.S.
Amazon shares also soared to 15% during after-hours trading after revealing the price hike as well as its 2021 performance review. The last three-month sales of 2021 expanded by 10% to USD 137.4 billion, with the retailer planning to invest in its cloud computing division and advertising business.
The firm’s profits for the quarter have also increased to USD 14.3 billion, which is nearly double recorded in 2020. This can be attributed to its investment in Rivian, an electric vehicle manufacturer that went public in November.
Amazon revealed that its sales increased by 22% to USD 469.8 billion in 2021, with profits reaching USD 33.4 billion. There were speculations that the supply chain disruption and high unemployment rates last year could severely impact the online retailer’s revenues.
Despite overcoming the odds last year, Amazon expects these issues to persist in 2022. In this context, Amazon CEO Andy Jassy stated that due to the pandemic over the holidays, the firm saw a labor supply shortage and inflationary pressures, despite these issues, the firm continued to feel optimistic about the business.
Mounting inflation and increased wages have driven USD 4 billion more costs during the last few months of 2021. The corporation is seeking to offset some of those costs with the hike in Prime subscription prices.
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