business news in context, analysis with attitude

by Kevin Coupe

There is an age-old question pondered by many retailers.

How do I treat my best customers better than everyone else, while not offending everybody else?

It is a question to which Amazon apparently has come up with an answer ... at least to the first part.

Because in its first Amazon Books store in Seattle, they're charging Prime members less for books than they're charging people who do not belong to Amazon Prime. Prime members - who spend $99 annually or $10.99 a month to belong - get a discount. Non-members pay list price. The books don't have price tags, but kiosks clearly delineate how much the discounts are - ranging from six percent to 40 percent.

This pricing structure, GeekWire suggests, "could signal a broader strategy for the company’s brick-and-mortar retail expansion."

The story also makes clear that the pricing differential applies only to books, not to electronics such as the Echo, FireTV and Kindle that also are sold in the store.

It is a fascinating and Eye-Opening approach. Amazon founder/CEO Jeff Bezos has said that his goal is to make belonging to Prime so irresistible and valuable that it would be irresponsible not to belong. And this would appear to be just one more piece of this overall strategy.

It is a risk. Will non-Prime members feel insulted when they find they have to pay higher prices? Maybe. But Amazon is counting on its powers of persuasion - and, I think, it is a pretty persuasive argument - to convince people that Amazon Prime can make their lives better and easier and less costly.

It is all a matter of luring them into the Amazon ecosystem. Because once they're there, Amazon believes, they'll never leave.

Which leaves it up to competitive retailers to figure out how to lure them away ... or prevent them from entering the ecosystem to begin with.
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