Amazon cuts free-shipping threshold to $25 on 18M items, pressuring Costco
Amazon will offer free two-day delivery with no minimum on 18 million items to non-Prime customers, lowering the threshold from $35 to $25. The US Commerce Department’s planned $400M anti-dumping tariff refunds on packaging imports may lift Costco’s gross margin by up to 20 basis points.
1. Amazon expands free shipping offer
Amazon has reduced its free-delivery threshold for non-Prime shoppers from $35 to $25, now covering 18 million items with free two-day shipping. This move erodes a key value proposition of warehouse clubs and could intensify price and service competition for Costco’s core grocery and household offerings.
2. Tariff refunds could boost margins
The Commerce Department is set to return $400 million in anti-dumping duties on imported paper and packaging products, a cost line item on Costco’s income statement. If applied in fiscal 2026, this refund could improve Costco’s overall gross margin by roughly 0.2%, supporting profitability amid flat membership fee growth.