Strategy question
Should Amazon offer “Amazon Prime Lite,” which offers just a few perks of Amazon Prime at a fraction of the cost? If the answer is yes, what would you include in Prime Lite, and how much should it cost?
- Amazon
- Strategy
- Hard
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What this question tests
Tests pricing and packaging strategy: deciding a genuine yes or no and designing a tier that expands the market without cannibalizing the core subscription.
How to approach it
- Take a position: yes, launch Prime Lite, targeting price-sensitive non-Prime shoppers who currently buy on Amazon without a membership.
- Define what to include: fast shipping only, perhaps a longer delivery window or a lower free-shipping minimum, without Prime Video, Music, or same-day delivery.
- Define what to exclude deliberately: keep out the entertainment bundle entirely, the biggest value differentiator justifying full Prime's price, protecting against cannibalization.
- Propose pricing: significantly below full Prime, roughly 40-50% of the price, positioned as a shipping-focused tier, not a starter version of the full bundle.
- Address cannibalization risk directly: target eligibility toward users who've never subscribed to Prime or churned specifically due to price.
- Define success: net new paid membership growth from previously non-Prime shoppers, and upgrade rate from Prime Lite to full Prime over time.
What a strong answer includes
- Takes a clear yes or no position and defends it with a specific target segment, rather than listing generic pros and cons.
- Deliberately excludes the entertainment bundle, correctly identifying it as the key differentiator that must be protected from cannibalization.
- Proposes a defensible price point, meaningfully below full Prime, and explains the positioning logic behind it.
- Addresses cannibalization risk with a concrete targeting strategy, not just naming the risk and moving on.
Common mistakes
- Proposing a Lite tier that includes too much value, risking existing Prime members downgrading and cutting revenue.
- Giving a vague it-depends answer without committing to specific tier contents and a price point.
Likely follow-up questions
- How would you prevent existing Prime members from downgrading to Lite?
- What would make you kill this tier after a pilot?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop