After reporting record sales and earnings, Amazon is hiking the price of its Prime membership for US subscribers.
The e-commerce behemoth announced a 17 percent increase in the yearly membership fee to $139.
The company stated it has no announcements to make about additional nations “at this time,” citing increased salary and transportation expenses as reasons.
It’s the first increase for Prime since 2018. Subscribers get privileges including speedier shipping and other perks.
More than 200 million users pay for the service worldwide, with many of them in the United States.
In after-hours trading, Amazon shares jumped about 15% on the announcement, which came along with the revelation of the company’s end-of-year results for 2021.
Sales in the fourth three months of 2021 increased by 10% year on year to $137.4 billion. However, development in sectors like as cloud computing, Amazon Web Services, and advertising drove those gains, while e-commerce revenues fell from 2020, when the pandemic fueled blockbuster gains.
Profits for the quarter increased to $14.3 billion, nearly double from the previous year. These advances were fueled by its investment in Rivian, an electric car manufacturer that went public in November.
Sales increased by 22% to $469.8 billion for the year, bringing earnings to $33.4 billion.
Analysts were concerned about the company’s prospects after officials warned last year that increased expenditures were expected owing to supply concerns and trouble attracting staff.
These issues, according to Amazon, have damaged the company and are expected to persist this year. In the first three months of 2022, it expects revenues to increase by 3% to 8%.
“We witnessed increased expenses over the holidays, as predicted, owing to labor supply limitations and inflationary pressures, and these challenges remained into the first quarter due to Omicron,” stated CEO Andy Jassy.
“As we emerge from the epidemic, despite these short-term obstacles, we remain confident and thrilled about the business.”
Inflation, particularly increased salaries, pushed up prices by $4 billion in the last months of 2021, according to the business. The corporation is seeking to pass some of those expenses to customers with the hike in Prime prices.
Mr. Jassy predicted that some people would cancel Prime because of the pricing hike, which will take effect on February 18 for new members and on March 25 for existing users.
However, he stated that this had never been an issue in the past.
Despite price increases of 7% last year – the fastest in almost four decades – consumer spending in the United States has remained steady.