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After missing Wall Street estimates for the holiday period, Amazon.com is considering a $20 to $40 increase in the annual $79 fee it charges users of its "Prime" two-day shipping and online media service, considered instrumental to driving online purchases of both goods and digital media.
Amazon has been trying to sustain its pace of growth by investing heavily in retail and distribution networks across the globe, while expanding into the technology realm with Kindle digital devices, cloud computing services and online media.
That has taken a toll on its bottom line. With revenue growth slowing as Amazon achieves unprecedented scale, analysts said investors may be getting impatient.
"Amazon's gotten so many hall passes on earnings," said Colin Gillis, an analyst at BGC Financial, adding that pressure on the company to produce profit is now rising. "Perhaps the market expectations for them to deliver income, as their revenue growth slows" is increasing, said Gillis.
Amazon now has to tread carefully as it ponders a Prime fee-hike, which could boost revenue and earnings but also risks alienating tens of millions of existing customers or discouraging new ones.
Executives said no decision had been made but stressed that they had not touched the fees since Prime's inception.
"When we launched Prime nine years ago, one of the things we hoped for was customers do a lot more cross-shopping, that they would buy more from us," CFO Tom Szkutak told analysts on a post-results conference call.
"And we've seen that trend."
Amazon's growth beyond the United States has struggled amid economic malaise in Europe and parts of Asia. At home, the company is still faring better than its fellow retailers, in part because of a steadily improving distribution system anchored by a growing web of giant warehouses, that helps keep costs down.
Retailers in general faced the most promotional 2013 holiday season since the recession, trying to outdo one another with deep discounts to lure shoppers. That has pressured traditional retail chains such as Sears and Kmart.
Also, Amazon's net shipping costs in the period jumped 19 percent to $1.21 billion.