Prime subscribers account for 30% of Amazon’s orders

Amazon’s Prime membership programme has become an important lever for the company in its battle against arch-rival Flipkart, accounting for nearly 30% of all orders on Amazon India.

Last July, Amazon India launched its annual Prime membership programme in more than 100 cities in the country, offering one-day and two-day delivery on hundreds of thousands of products and exclusive discounts for an initial price of Rs499 per year. Prime was the single biggest-selling product among the 15 million units sold on Amazon India during a fiveday sale in October.

Amazon expanded the service by adding video content in December, pitting it against the likes of Netflix and Hotstar.

“We’ve seen a big rise in frequency as well as a big lift in actual order values from Prime customers,” said Akshay Sahi, head of Amazon Prime. “What happens is apart from mobile phones, any of the other categories are not one-time purchase categories. Because you just keep buying more and more of those things. Your fashion budget will move more towards Amazon, your electronics budget will move more towards Amazon, your consumables budget moves more towards Amazon because of the loyalty you have, the experience you enjoy and the programme that you’re a part of.”

Since January, Prime subscribers have comprised nearly a third of all orders placed on the platform, a massive jump for a service that was introduced less than nine months ago.

Rival Flipkart, too, has a loyalty service but the firm isn’t pushing it aggressively. Flipkart executives say privately that most Indians are disinclined to pay for delivery and convenience or content.

However, Amazon is betting big on it and Prime’s initial popularity has convinced the firm that the programme will be one of its most significant weapons against Flipkart.

In the US, Amazon Prime customers spend a lot more on Amazon than they did previously, they buy products they weren’t buying earlier and they also tend to reduce their spending on other platforms. That’s why the service, if it’s adopted by a large number of shoppers, is a double whammy for Amazon rivals.