video Amazon reports nearly $4B loss in 1Q
Slatestone Wealth Chief market strategist Kenny Polcari discusses Big Tech’s earnings as Amazon reports a $4 billion loss for Q1.
A select number of Amazon Prime members are apparently so dissatisfied with the subscription service’s free Whole Foods delivery offer ending that they’re taking legal action.
The e-commerce giant acquired the supermarket chain in 2017, and it began offering free same-day delivery on orders worth $35 or more to Prime members a year later.
Amazon implemented a $9.95 service charge on all delivery orders from Whole Foods in October 2021. Orders set for pickup orders that are valued at over $35 remained free for Prime members, an Amazon spokesperson told FOX Business at the time.
AMAZON PRIME DAY 2022 IS COMING THIS SUMMER. WHAT WE KNOW
The service fee is meant to cover operating costs associated with grocery delivery without having to raise prices on products, but not all Prime customers agree that the business practice is fair.
Whole Foods Market is a multinational supermarket chain that’s headquartered in Austin, Texas. Amazon acquired the company in 2017. (iStock)
Joy Pecznick and Gil Kaufman, two Amazon Prime members from the state of California, filed a class-action complaint to the U.S. District Court’s Western District of Washington, on May 31 and are listed as plaintiffs in a 15-page legal document read by FOX Business.
The complaint argues that Amazon should have reduced the rate of its subscription service when free delivery was taken away.
"Individuals signed up for the benefit of Amazon Prime to provide free Whole Foods delivery, many signed up at a time when most were avoiding going to stores, and still do," said Thiago M. Coelho, one of the class-action lawyers handling the case from the Wilshire Law Firm in Los Angeles, in an email sent to FOX Business.
"To strip that benefit from those individuals after gaining additional members and market share is concerning to any member who was induced to sign up exactly for that reason," Coelho continued.
WENDY'S, MCDONALD'S LAWSUIT CLAIMS BURGER ADS MISLEAD CONSUMERS ON PATTY SIZES
The complaint alleges that Amazon tested Whole Foods delivery service charges during the summer of 2021 in Portland, Providence, Manchester, Detroit, Boston and Chicago before it rolled it out nationally.
Amazon Prime are often recipients of two- or one-day delivery, which is an included perk with annual and monthly memberships. (REUTERS/Carl Recine)
It goes on to say that free delivery on Whole Foods orders "was a lucrative decision for Amazon" that helped the company triple grocery deliveries from 2019 to 2020, which also coincided with the COVID-19 pandemic.
The complaint argues that "hundreds of thousands, if not millions, of Amazon Prime members paid for a membership because they wanted to take advantage of Prime’s free Whole Foods delivery service," but the offer was "unfairly" taken away
"As a result of Amazon’s unfair business practices, consumers paid $119 for a service that was unfairly terminated," the complaint says. "Prime members did not receive the benefit of their membership bargain."
MISSOURI UNIVERSITY AGREES TO $1.65 MILLION SETTLEMENT IN COVID-19 LAWSUIT FROM STUDENTS
Wilshire Law Firm, which is based in Los Angeles, and Triad Law Group, which is based in Woodway, Washington, are representing class-action clients in the Western District of Washington.
Amazon offered Prime members free same-day delivery on Whole Foods orders over $35 in value from 2018 to 2021. (The Associated Press)
The complaint states that "there are more than 100 members in the proposed Class" and it demands a jury trial.
FOX Business reached out to representatives at Amazon and Whole Foods for comment.
Amazon Prime memberships include a long list of delivery, streaming, shopping, reading and entertainment benefits which range from free delivery on select non-grocery items, exclusive deals, access to Prime Video and Amazon Music, Prime Try Before You Buy, early access to books and more.
CLICK HERE TO READ MORE ON FOX BUSINESS
Current Amazon Prime membership fees are $139 per year or $14.99 per month. Students have a discounted fee that’s $69 per year or $7.49 per month.
Amazon is a tech-focused e-commerce platform that hosts a number of streaming and digital platforms, including Amazon Prime Video, Amazon Music and Amazon Photos. The company is also partnered with Audible, an audiobook company. (Thomas Trutschel/Photothek via Getty Images)
In previous earnings calls, the e-commerce platform has disclosed that it has more than 200 million Prime members.
The company made $116.4 billion in revenue for its first quarter of 2022, according to the quarterly report Amazon published in April.
Read Full Article