Keeping Amazon’s Prime pump primed
Amazon Prime memberships — the main engine behind the retailer’s online dominance — may be starting to step off the gas.
That’s according to new research by Consumer Intelligence Research Partners suggesting that in the last year, Prime memberships grew 8 percent — the lowest annual rate since the group began tracking the data in 2012. The group also put the number of U.S. Prime members — a stat Amazon famously has kept under wraps — at 97 million, with Prime shoppers spending an average of roughly $1,400 per year, compared with $600 per year for non-member shoppers.
The numbers offer hardto-find insight into what one analyst dubbed “as opaque a company as I’ve ever covered.” But they also raise questions about how Amazon might revamp or reimagine Prime when there are fewer and fewer people left to reach.
“It’s not a surprise that the member count is nearing saturation in the U.S.,” said Josh Lowitz, partner
and co-founder of CIRP. “Arguably it’s a victory that Amazon got there so fast.”
That leaves what Lowitz boiled down to the magic question: “What will Amazon do next?”
Amazon did not respond to a request for comment about CIRP’s report. The company’s founder, Jeff Bezos, also owns The Washington Post.
Lowitz said that since Prime’s inception in 2005, Amazon has honed in on making the service “compelling” to customers, including with two-day shipping, streaming video services and promotions such as Prime Day. But as it reaches saturation, Amazon must rely on monetizing its existing Prime members.
That might include getting members to listen to their favorite podcasts on an Echo Dot, or a slew of other measures to bring Amazon services and products into daily life.
In time, Lowitz said that approach could position Amazon to “become the pharmacy of choice, the travel agent of choice.”
“We think a Prime member is more likely to say, ‘Maybe I like my dress shirts from Amazon,’ because of that trusting relationship,” Lowitz said.
(CIRP draws its figures from quarterly surveys of 500 Amazon shoppers. Prime estimates are drawn
from the surveys as well as Amazon financial information.)
In April, Bezos announced that Prime membership had exceeded 100 million paid Prime members worldwide.
Estimates on Prime memberships have been the subject of much speculation, especially since the numbers also serve as a metric for Amazon’s whopping revenue stream. The math can be difficult to parse: It’s not quite as simple
as multiplying the cost of a $119 annual membership by 100 million. Some members — such as students,
for example — have options to pay less, while others pay more for a monthly subscription.