As reported in the Amazon CEO’s latest shareholder communication released this week, Amazon has exceeded 100 million paid Prime memberships globally.
That is an astronomical statistic. It’s also significant
because it is the first time that Amazon has revealed its actual number of
Prime memberships. Amazon Prime started life in the US in 2005 as a $79 a
year membership program which offered as its sole benefit free two-day
shipping. In those days, that was a big deal (shipping costs were a major
barrier to buying online), but it was only the first turn of the Prime
flywheel.
Over the years, the program has expanded to other
countries and added more benefits. That’s key to its success. As Bezos wrote in
this year’s shareholder letter, customers are 'divinely discontent. Their
expectations are never static – they go up.' That’s why Amazon keeps adding
value to the program. In the US, you get a bundle of benefits that stretches
beyond free shipping to include Prime Video, storage of your precious memories
on Prime Photos, free Kindle books and more.
Ever-faster speed of fulfillment is also critical. In 50
cities around the globe, Amazon offers ‘Prime Now’, which promises free 2-hour
delivery.
Prime has fundamentally changed the way that America
shops. Once consumers have paid their annual membership fee, they want to
extract as much value from the program as possible. Amazon Prime becomes the
default first stop on any shopping trip – which is why over half of all product
searches start on Amazon. According to Consumer Intelligence Research Partners,
Prime members spend on average $1,300 with Amazon a year, about twice as much
as non-Prime members. About 63% of Amazon customers are estimated to be Prime
members.
On July 15, 2015, Amazon ran its first Prime Day Sale, a
day of deals exclusively for Prime members. It was not only successful
financially (‘bigger than Black Friday’), but Prime Day was also a massive
recruiting tool. ‘Hundreds of thousands’ of new members signed up on Prime Day,
according to Amazon’s Greg Geeley. That same day, traditional retail quivered
in its boots – seemingly in response, the iconic New York toy store FAO
Schwartz closed its doors on its 5th Avenue premises for the last time.
Prime Day last year was an even bigger hit, with $1.56
billion in sales. To add to Amazon’s coffers, the number one selling item on
Prime Day was an Amazon product, the Echo Dot.
Amazon is pulling different Prime levers to suit
different markets around the world. In India, annual membership is 999 rupees –
or about $15 – and Prime Music is included. In the UK, Prime offers free
one-day shipping, not two as in the US. In the last 12 months, Prime has
expanded to Mexico, Singapore, the Netherlands, and Luxembourg.
Back in 2016, Jeff Bezos said that ‘we want Prime to be
such a good value, you’d be irresponsible not to be a member’. Now it seems
that consumers all over the globe are ‘acting responsibly’ and signing up to
Prime
Source CNN
