But it’s not complely free shipping. It’s $140/year free shipping.
That’s the thing. The more expensive Prime gets the more people who do pay for it feel locked in.
People end up feeling like they need to do more and more shopping on Amazon in order to justify that steep yearly subscription cost. Dumping Amazon completely is more effort than simply shifting more of your shopping over to Amazon. This causes people to get more and more locked in and comfortable with using Amazon for the vast majority of their online shopping.
The other side of that coin is once you do drop Amazon Prime you realize that Amazon isn’t irreplaceable. It’s fairly easy to avoid them if you are willing to compromise a little.