Companies that have the ability to price according to the strain on their system, like FedEx and UPS, are presumably far more robust in this scenario. Here's the rub: Amazon Prime is a contract for services at a certain annual price between the customer and Amazon. Amazon cannot easily just ask for more if their end of the deal ends up more costly to deliver than forecasted.
It's a tangent, but at the All Hands where Jeff introduced Prime, he made it very clear that it was actually a money loser for the company at that point. He did it anyhow because it satisfied both the customer obsession and the long term growth principles Amazon has followed from the start.
Because of this, I very much doubt that Amazon will mind losing money on Prime member shipping during this pandemic. I wouldn't be shocked if some of the current management made noises in that direction and that was part of what got Jeff to take the reins again.
Losing money on the two-day shipping in order to make money on the volume of sales is just like saying “we will lose money on leasing planes but make it up on the product sale”. That announcement was certainly divergent e-commerce strategy at the time, but Amazon intends to cover its basis on the overall transaction.
In today’s plight, it’s the sheer scale of money Amazon might lose fulfilling its backlog of orders, and potentially why its delaying shipping with the “essential items” reasoning, that’s of particular interest.
It’s sadly not uncommon for businesses to promise various services and then unilaterally change their minds. While I’m sure that there are some exceptions, most TOS have a ton of “we reserve the right to change our minds whenever for whatever reason, without warning”
Now that’s kind of different from the PR fallout. Amazon is risking a mass walkout of their customers over this; it just depends on whether or not customers see this as a reasonable response to a crazy circumstance, or a greedy move on Amazon’s part to maintain profitability over their commitments to customers.
> It’s sadly not uncommon for businesses to promise various services and then unilaterally change their minds. While I’m sure that there are some exceptions, most TOS have a ton of “we reserve the right to change our minds whenever for whatever reason, without warning”
I was under the impression that one party cannot unilaterally modify the terms of a contract without offering consideration to the other party, and the consideration can't be "we will continue to perform according to the terms of the contract".
Thats what they are doing, and I, the customer, am no longer getting the value I signed up for.
For a "customer obsession strategy," this one should hurt their bottom line, either with cancellation of prime subscriptions or lost sales. I am not saying amazon should be penalized or taken to court. This is just the biggest vulnerability I have seen out of the Amazon machine, and I think its very interesting.
