Strategy: Prime members spend way more on Amazon than other customers — and the difference is growing (AMZN)

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Prime is very important to Amazon.

The difference between purchases made by Prime members and other shoppers is growing on Amazon, according to a new study by Consumer Intelligence Research Partners. It shows that Prime is becoming more important to Amazon, though CIRP also reports that the company's membership growth is slowing.

  • The difference between purchases made by Amazon Prime members and regular customers is widening, according to a new report by Consumer Intelligence Research Partners.
  • While Prime members buy an average of $1,400 a year worth of stuff on Amazon, regular customers only spend $600, the study found.
  • Prime members are spending $100 more than a year ago on average, while others are spending $100 less on average.
  • It shows that Prime is becoming more important to Amazon, though CIRP also reports that the company's membership growth is slowing.

Amazon Prime is becoming even more important to the e-commerce giant.

The difference between spending by Prime members and regular customers on Amazon is widening, according to a new report by Consumer Intelligence Research Partners.

While Prime members buy an average of $1,400 a year worth of stuff on the website, regular customers only spend $600. That's a wider gulf than was reported by CIRP last year, when Prime customers spent an average of $1,300 and other customers spent $700.

It shows how important Prime customers have become to Amazon, and how the membership creates loyalty to the site with irresistible perks like free two-day shipping.

At the same time, however, Prime's membership growth appears to be slowing in US, according to CIRP. The firm estimates that there are a total of 97 million Prime subscribers in the United States. Over the past 12 months, that number only grew 8%, which is the slowest rate recorded since CIRP started tracking Amazon Prime subscriptions in 2012.

"Prime membership growth has clearly flattened," Josh Lowitz, a cofounder at CIRP, said in a release. "Amazon Prime membership has now spread far beyond the early adopters who were presumably the most committed Amazon shoppers."

Prime is Amazon's golden goose, and the company keeps adding to the suite of benefits it provides its members to entice customers to join and then stay.

While many still associate Prime solely with its two-day-shipping guarantee, it also offers things like video and music streaming. And there are some items available only to Prime members, creating additional value.

In May, Prime members were given another perk: big discounts at Whole Foods. The rollout finished this summer.

The value of Prime has risen steadily over the years as Amazon has added these benefits. A recent JPMorgan analysis estimated that the service was actually worth $785 a year with everything it offers. That's about 6.5 times the actual cost of an annual Prime subscription, $120, even with this year's price increase.

"Prime delivers such massive scale and features that we believe it would be very difficult for any company to replicate and compete against, and Amazon continues to expand and add more value to Prime by adding new benefits and growing existing offerings," the analysts wrote.

That means that even if a customer doesn't take advantage of everything a Prime membership offers, they're still likely to perceive it as a good value.

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