The fee is getting paid somehow - either by you up front, as a subscription, or for "free" built into the cost of the item.
> The company loses an estimated $1 billion to $2 billion on Prime shipping annually
http://www.marketwatch.com/story/is-free-shipping-killing-am...
Amazon wants market share enough to absorb a loss on shipping costs. It's part of why Amazon is still not profitable.
There might be some truth to that, but the better explanation for why Amazon isn't profitable is that it's simply plowing all of its profits back into the business. This link is older, but it does a pretty good job of going through the numbers and Jeff Bezo's thinking: http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why...
It's a cost of operation or cost of sales, IMO, and you have to look at it in the context of overall profitability and revenue growth, not as a standalone line item. Otherwise, you might argue for those other three to close all their retail outlets or charge admission in order to "stem the losses".
Not sure I understand the distinction you're attempting to make. It's a function of their model that can affect their competitiveness and may well argue for (or against) closures.
The point I was trying to make is that Prime (and any associated losses) is part of Amazon's go-to-market strategy, just as opening retail stores is part of HD, WMT, and BBY's strategy. Saying that Amazon is "losing money on Prime" but that the others aren't "losing money on stores" seems a double-standard to me.
Like retail stores, they are also part of the required infrastructure to fulfill customer orders.
Prime, OTOH is more a marketing expense. I would compare it to coupons, store savings cards, etc.
So, the double-standard doesn't exist in my view; unless you were to count retail store costs without counting Amazon fulfillment costs.
A profit margin of 0.57% [0]. That's so close to zero that I'm comfortable saying they're not profitable.