AMZN Amazon.com Inc

By Laura Stevens 

Amazon.com Inc. on Thursday said it would raise the annual price of its Prime membership program 20% to $119, a sizable leap that could deliver meaningful revenue but also comes amid a sharp jump in fuel prices.

On a quarterly earnings call, Amazon's executives said Prime's second price increase in its 13-year history reflects the program's rising costs and expanded options, specifically faster shipping and a larger library of streaming music and video titles.

"The value of Prime to customers has never been greater," said Chief Financial Officer Brian Olsavsky on the call with analysts. "And the cost is also high, as we pointed out especially with shipping options and digital benefits."

The price increase will apply to new members starting May 11 and affect renewing members as of June 16.

Amazon announced the price change after reporting its quarterly revenue jumped 43% and its profit more than doubled to $1.6 billion. Its loyal base of Prime members, which now top over 100 million globally, are estimated to spend far more than the average shopper on the site.

Amazon has built out its Prime program rapidly over the past decade, adding features including one- and two-hour delivery, original video content and free Kindle books. The company has cited shipping costs for speedy delivery and video programming in particular as major cost drivers.

Most recently, the company has added Prime Now delivery of Whole Foods groceries to 10 U.S. markets, as well as the option to have packages delivered to customers' trunks in millions of General Motors Co. and Volvo Cars vehicles.

Amazon floated a price balloon earlier this year, raising the Prime monthly fee to $12.99 from $9.99. When the program started in 2005, it cost $75 annually. The last time the company increased the annual price of Prime, to $99 in 2014, there were 20 million items eligible for two-day shipping, Mr. Olsavsky said. Now there are more than 100 million.

"It's much different than it was in 2014," he added. "This is a better reflection of the cost value of the program."

Write to Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

April 26, 2018 19:00 ET (23:00 GMT)

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