Amazon Eyes Wireless Services to Address Prime Membership Slowdown
Ever since Amazon hiked the Prime membership fee to $139 from $119, subscriptions have stagnated significantly. A slowdown in the addition of new subscribers has been attributed to the package becoming less attractive to consumers struggling with a high inflation rate. However, the tech giant has now found a way out of the slowdown.
Amazon Wireless Services
Reports indicate that the e-commerce giant has held discussions with various wireless carriers as it considers adding low-cost mobile phone service to prime subscribers. The company has already tried to ink a deal with Verizon, T-Mobile and Dish Network as it looks to get the lowest possible rates for phone service that it will, in return, offer to Prime subscribers.
While talks with the wireless carriers have been ongoing for over six weeks, there is still a likelihood of the tech giant failing to reach an agreement. The biggest hurdle is convincing the carriers that any agreement would work for both companies and not undercut the carriers.
The biggest carriers, led by Verizon, AT&T, and T-Mobile, could come under pressure on Amazon offering low-cost phone services. The fact that Amazon always ends up dominating any segment it enters should be a big concern for wireless carriers.
Amazon Ripple Effect
Dish is the only carrier unlikely to feel the heat on Amazon entering the wireless business; the struggling satellite TV Company is trying to transform into a cloud-based wireless carrier to better compete against the market leaders. Given that it is already working with Amazon Web Service Division, it could be open to a deal that will help unlock new opportunities.
However, Amazon entering the wireless space could also be beneficial to the carriers as any package will go a long way in attracting more traffic to the expanded 5G networks. The downside would come on Prime Wireless becoming popular to the extent of eating the carrier’s customer base.
Over the years, the tech giant has shown a willingness to absorb billions of dollars, all in an effort to strengthen its edge in any new markets it enters. It has already spent billions of dollars to enhance its shipping network and movie production to fuel Prime membership growth. In addition, Amazon offering wireless services at an attractive price could prompt customers to cancel their mobile services, which could eat into carriers’ revenues.
Taking on Walmart
By offering phone service for $10 a month or free, Amazon could succeed in strengthening loyalty to the Prime package. In addition, it could go a long way in helping attract new subscribers who have been on the fence ever since it hiked prices.
Adding low-cost phone service should help Amazon strengthen its competitive edge on Prime membership that has stagnated at 167 million. The company is under immense pressure from Walmart, which has emerged as a lower-cost alternative offering almost the same packages.
The tech giant has also started leveraging artificial Intelligence technology as it looks to enhance its supply and logistics network. For example, it uses technology to enhance the handling of its inventory to ensure products are always stored in facilities close to customers. The company hopes to enhance same-day and next-day delivery by enhancing inventory management.