June 4, 2013

The Verdict on Amazon Prime

With my Amazon Prime membership account up for renewal next month it’s time for me to go back over my receipts and ask the age old question: “was it worth it?” Which means I am going to face the reality of just how much I spend on Amazon. gulp.

Momappriciation Events:
Being a paid member of Prime and also an “Amazon Mom” I was able to participate in Momappriciation Events. During these events many of the baby and toddler merchandise is 20% off with coupon code. There were three events last year that I know of and I participated in two for a savings of $101.04. Most of that savings can be attributed to the convertible car seat and stroller. Good timing on my part, but unlikely to be repeat purchases any time soon.

I spent $361.56 on diapers averaging 19.4 cents per diaper. Don’t think that’s just because I’m on top of things with the Subscribe and Save discount. The additional 15% subscribe and save discount through Amazon Prime translated to $67.80 in savings. I missed the cutoff on for subscribe and save three times and had to pay full price. Had that not been the case I would have saved an extra $21.19. Amazon has some of the best prices for diapers.

This has me thinking that every disposable diaper cost analysis I’ve ever seen is crazy off. They all seem to think it will cost an average 30 cents per diaper for a $800 total price tag to diaper a baby in disposables. I’d be shocked if it cost more than $500 to diaper Nicki in brand name, non-generic diapers. (Huggies for the curious, they fit around her umbilical cord stump best as a newborn and we’ve never had the need to switch.) Not included in this total is gifted diapers (a friend’s baby outgrew his size 2s, so we got half a box plus some overnights for free – maybe $30 worth?) or in store purchases. We purchased 3 packs of various brands of newborn diapers to try out prior to giving birth (3 packs costing roughly $10 a piece, some of which were given away). My parents also bought a small pack of regular and overnight diapers when we flew East so we wouldn’t have to travel with them, and we ended up needing another small box while there (Maybe $50 total?). That would put the total cost of diapers at $470, well below $800.

Shipping Savings:
Out of the 42 purchases I made last year, 11 were under the $25 threshold needed for free Super Saver Shipping. Guestimating an average shipping cost of $4.99, that translates to about $54.89 shipping charges I would have faced without Prime. Now, that’s assuming I act rationally. I hate paying shipping costs, and am just as likely to look for additional items to add to my cart to qualify for free shipping. In order to qualify for free shipping, however, I would have had to add at least $173.32 worth of merchandise spread out over those eleven orders. Of course, I probably wouldn’t have spent quite that much. Some of those small purchases were not time sensitive and could have been combined into a single purchase that would have qualified for free shipping. Some, not all.

The true savings is probably somewhere between $54.89 and $173.32, so we’ll go with the lower number of $54.89 to make our savings estimate a conservative one.

Impulse Buys:
It’s been speculated that Amazon Prime is so profitable for Amazon because it encourages impulse buys and extraneous purchases. Since it’s so quick and easy to purchase from Amazon, people purchase more than they initially intended to.

To figure out the additional cost of impulse buys, I first considered what items I purchased are a part of the long tail. The long tail refers to items that only a few customers would want (e.g. table bumpers in less popular colors) as opposed to mass marketable items that appeal to a large group of customers (e.g. table bumpers in common colors). Big box stores do not stock long tail items because they’re likely to sit on the shelf for a while since they appeal to very few customers. An example of a long tail purchase I made is an unusual shaped cake pan. It’s not popular enough for box stores to keep it in stock, so my choice was to buy it online or don’t buy it. I’m only considering these long tail impulse buys because if the item was also available in box stores it might be just as likely to be impulse buy at some later point in time.

Of all the long tail purchases I made, $29.98 were on impulse buys. That is, $29.98 were on items I would not have felt compelled to shop for it outside of Amazon.

The Verdict:
Total Savings: $101.04 (mom appreciation events) + $67.80 (savings on diapers) + $54.89 (savings on shipping) = $223.73
Total Cost: $29.98 (the cost of impulse buys) + $39 (the cost of Prime with student discount) = $68.98
Net Result: A savings of $154.75

Definitely worth it this year, but I’m predicting the savings I enjoy will go down over time. Next year I’m less likely to benefit from the mom appreciation event since we won’t need new items like car seats and strollers, and when we’re out of diapers we’ll save even less. But for now, I’m a very happy prime customer.

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