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A Prime Example of Smart or Stupid?

For an interesting face-off on Amazon's new Prime service, check out the Wall Street Journal today. (The Journal is offering this article free for the day.) For those who missed the news last week, Amazon announced a new club-like service that provides "free" two-day shipping on unlimited orders for $79 a year. While one columnist gives the service a tentative nod—"Amazon is bidding to lock itself in as its loyalists' default choice ... a state of affairs very different than today, and that would translate into an awfully healthy effect on the bottom line"—the other is much more skeptical. ("The online-retailing king is starting to look jittery, like a wide receiver catching a pass over the middle.")

In a way, it's a strange fit. Club-like programs are often for commodity-like companies where customers aren't inclined to be loyal, such as airline frequent flier programs or grocery store point programs. And yet, Amazon is built on a model customer experience that shouldn't need a loyalty program. But as other online retailers begin catching up with Amazon's customer experience, is this a sign of increasing pressure? What do you think of Amazon's move?

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