Amazon Prime Day super sale announced - but only for subscription customers

Prime Day offers Amazon customers more than 100,000 deals

Amazon's ‘fulfilment centre’ in Marston Gate, Milton Keynes (Getty Images)

Amazon has said it will hold a day of super sales on July 12 for subscription customers.

Prime Day offers Amazon customers more than 100,000 deals that will be released throughout the day - just as long as they are members of Amazon's £79-a-year Prime service.

Amazon said customers are eligible for Prime Day deals as long as they sign up to a one-year free trial with Prime before July 12.

Why does Amazon what you to sign up to Prime?

Data shows that Prime members spend almost twice as much as other Amazon shoppers, guaranteeing the company year-round revenue and helping it to balance sales that are heavily weighted towards the fourth quarter, during the Christmas rush.

Like a newspaper sells ads based on its number of subscribers, Amazon keeps its shareholders happy by showing them that it can make future sales through Prime customers.

Amazon also charges fees to guarantee merchants and uses this cash to offset Prime shipping losses.

Merchants pay to participate in the “Fulfilled By Amazon” scheme and get handling, packing, weighing of products and also, in some cases, monthly storage, which gets more expensive depending on the time of year.

“Put another way, Amazon rents out its warehouse space and charges merchants for fulfillment services and inventory management, but in return, merchants know that Prime members spend a lot more and highly prefer to buy products that are eligible for Prime shipping,”writes Evan Niu, a technology specialist.

So should you be suspicious of Prime?

In short: no. Amazon gets a far worse deal out of Prime than its customers do, even if those customers forget to cancel their free trial and "accidentally" pay the annual subscription fee of £79.

Company filings show that Amazon has always made a net loss from unlimited shipping.

As the chart shows, these losses have got worse over time as Amazon's Prime customer numbers have grown.

The company doesn't reveal how many Prime customers it has except to say that the numbers are now in the tens of millions worldwide.

The subscription charge help Amazon to recoup some of its losses – but it does not make up the gap.

For Amazon, unlimited shipping is too good to be true.