Friday, April 20, 2018

Amazon reveals it has more than 100 million Prime Members

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

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