Nearly six months after raising its U.S. annual Prime subscription price from $119 to $139, Amazon is now adjusting the fee for members in major European markets including the U.K., Germany, Spain, Italy and France.
In Germany, Amazon’s second-biggest market after the U.S., annual Prime fees will rise 30 percent to 89.90 euros (approximately $91). The third-biggest market, the U.K. will have a 20 percent increase to 95 pounds (approximately $114) per year, amounting to an increase of 1 pound per month from 7.99 pounds ($9.60) to 8.99 pounds ($10.80).
This represents the first Prime price jump in eight years for U.K. users, while subscribers in Germany last saw their Prime fee change back in 2016.
Prime members in France will pay 43 percent more with the hikes, jumping from 49 euros to 69.90 euros (about $49 to $69). Both Italy and Spain saw a 39 percent increase in Prime prices, with each country’s subscription jumping from 36 euros to 49.90 euros (about $36 to $49).
The price increases across all five countries totals 31 percent on average, steeper than the 17 percent jump U.S. Prime prices saw in February.
The new prices will come into effect on Sept. 15, and will impact all new members and renewals. Customers can lock in their current annual price for the next 12 months if they sign up or switch to the annual plan by Aug. 14.
Amazon also recently agreed to make it less confusing for customers in Europe to cancel their Prime subscription amid complaints from consumer groups and ongoing antitrust investigations from the European Union.
In a statement to members in the affected European markets, Amazon cited “increased inflation and operating costs” as well as faster delivery and more content as factors behind the increase. “We will keep working to ensure Prime offers exceptional value for members,” it said.
Consumers aren’t the only ones paying extra in response to the heightened expenses, with the company adding a 5 percent surcharge in April for sellers using Fulfillment by Amazon logistics services. In May, Amazon imposed a similar 4.3 percent fuel and inflation surcharge on sellers storing and shipping their products in major European markets.
Amazon is raising prices as it also looks to right-size its industrial real estate, which it is currently doing by subleasing excess warehouse space. A Bloomberg report also raised the possibility of the e-commerce company walking away entirely from some leases, freeing up additional square footage. Amazon never confirmed whether the company would consider early lease terminations.
Southern California, New York, New Jersey and Atlanta were cited as markets where Amazon’s real estate portfolio is bloated.
The tech titan is even pausing construction on six new office buildings in Nashville, Tenn. and Bellevue, Wash. as the company weighs its costs amid a hybrid working model.
In April, Amazon reported a $3.8 billion net loss—its first quarterly loss in seven years—from headwinds including higher wages, rising gas and transportation costs and an unrealized loss from its stake in electric vehicle manufacturer Rivian Automotive. Despite the loss, Amazon is fully committed to Rivian, announcing this month that it plans to bring thousands of custom electric delivery vehicles to more than 100 cities by the end of this year, and 100,000 across the U.S. by 2030.
Adding to the pressure, the company has paid a boatload for new content for fall 2022. In the U.S., it is aiming to attract and keep millions of NFL fans by making Prime Video the official home of Thursday Night Football. And in Europe, the company has splashed out on rights to broadcast Premier League and Champions League soccer. Amazon’s increasing investment in other Prime Video content includes its $8.5 billion acquisition and integration of MGM Studios and its new Lord of the Rings series scheduled to premiere this fall.
On top of the spending, there’s also worry that Amazon’s cash cow, the Amazon Web Services (AWS) cloud division, could feel the heat of an economic downturn if a greater portion of startup clients abandon the service.
But the cost issues that plague Amazon are hanging over virtually everyone. Walmart on Monday warned its 2022 profit would fall more than anticipated as higher fuel and food prices led consumers to tap the brakes on discretionary spending. As such, the price hikes come at a time when Amazon may need to make up for a potential sales loss.
At least in the U.S., it appears membership growth has stalled. Amazon’s subscription service ended the first half of 2022 with 172 million members in the U.S., the same as six months ago, according to data from Consumer Intelligence Research Partners. The stagnation follows two years in a row in which the company added 30 million net new members.
While price hikes have been the norm for many consumer brands and retail operations throughout 2022, businesses have sought to soften the blow of the increasing expenses elsewhere. Global fast-fashion sellers such as Boohoo, Zara and Uniqlo, as well as other U.K.-based apparel sellers including Next and Sports Direct, have all implemented new return fees in 2022, to the chagrin of some consumers who have made their opinions known on social media.
Prime’s hike also came after other companies have raised their prices. Rent the Runway raised its membership fees several months ago. Disney earlier this month hiked the price of its ESPN+ sports streaming service. And earlier this year, Netflix raised prices in several markets.
Amazon reports its second-quarter earnings on Thursday after market close.