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Amazon's Free Shipping Drives Success

Amazon Prime--the $79-annual-fee, two-day shipping program that founder Jeff Bezos introduced to the chagrin of Wall Street two years ago--looks like a linchpin to the company's remarkable run of increases in quarterly sales.

Without divulging specifics, Bezos says that Amazon Prime changes the way customers shop, encouraging them to buy across more categories. Amazon is mum about the shipping costs, but Bezo's says the profits it makes on shipping items like expensive digital cameras offset the loses it takes on disposable razors. But the real reason Prime has penciled out is that the company has mastered the art of bringing in cash from customers long before it needs to pay suppliers and creditors.

It's not just Prime, of course. Amazon has spent the past half-decade streamlining operations, adding everything from beauty products to gardening tools to its online store. Its built a network of 1.1 million merchants selling through its systems.



Read the whole story at USA Today »

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