Michael Aaron Flicker

The story of Amazon Prime is documented, and his executive leadership team was very worried

that offering free two-day shipping could absolutely be abused by customers and drive massive financial disruption.

They were worried that it could bankrupt the company by giving such a good offer away for one fixed fee.

And so when we talked about some people that just have this amazing insight into humanity, the credit goes to Jeff Bezos who said, I just believe if we give them this offer, it will really

increased their love of Amazon, increased their use of Amazon.

And he was right.

Today, approximately 83% of US households shop on Amazon.

And Amazon Prime shoppers spend, they spend a one-time upfront fee of $139.

And

then wanting to be consistent with having now invested that upfront fee, they are coming back to the brand more and more.

And what the data shows is not only do they come back, they spend more than their non-prime counterparts.

So it's really a win for Amazon to have them made this investment and then come back and shop and spend more because of it.

You know, it's an interesting question.

Walmart, I believe, now has two-day free shipping.

So finally, they've gotten to the spot where they're matching the service.

But there is something about being a first mover in a category that gives you authenticity in a way replicating other success sometimes falls short.

We call what...

Amazon has really established here the sunk cost fallacy because it's not necessarily rational, meaning I spent this money for my Amazon Prime membership, but it could be less expensive at Walmart, and yet I still buy it at Amazon.

That desire to want to be consistent with my past behavior may not be rational.

It's more emotionally driven, but it is how we act.