Subscription Shipping

Amazon.com just introduced Amazon Prime ... a subscription shipping offer. Here's the scoop:

Unlimited Express Shipping

• Free Two-Day Shipping on over a million in-stock items
  
• Overnight Shipping for only $3.99 per item—order as late as 6:30 PM ET

Effortless Shopping

• No minimum purchase required
• No need to consolidate items to save on shipping
  

Convenient Sharing

• Share the benefits of your Amazon Prime membership with up to four family members living in the same household

Hmm ... very interesting. It would be interesting to compare the purchasing behavior under these different shipping rate pricing strategies:

• Subscription (pre-paid) shipping
• Tiered shipping rates in which
  
• the larger your cumulative purchases over a time-period, the lower your shipping rates, or
  
• a threshold is defined that, once reached, all shipping charges paid to date are refunded, or
  
• A cap is placed on cumulative shipping charges over the course of a time period.
  
• Free shipping.
• "Standard" shipping
  

UPDATE (2/6 @ 5 p.m.): Seth Goodin suggests:

But this has nothing to do with saving money on shipping and everything to do with Amazon's innate understanding of human nature. Once you buy in, every single time you buy something from any other store (online or off) you'll say to yourself, "ouch, I can't buy this here. I'll be wasting the money I spent at Amazon."

Hmm ... a pre-pay lock-in. Is this an effective long-run strategy when the pre-pay is for an add-on that complements the core value offering? Especially when those of us with patience can avoid shipping/handling charges altogether for many Amazon purchases?

That's an important difference relative to this scenario that Seth suggests:

Imagine a new chain of cafes that offers a coffee club. For a flat fee, you get all the wifi and lattes you can handle. With the markup on both, the owner does great, and people would feel terrible every time they strayed.

Here, as the pre-pay is tied to the core value offering, this type of approach strikes me as offering considerably more long-term potential.