Amazon Prime Review
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According to estimates from Consumer Intelligence Research Partners, Amazon has 151 million Prime members in the United States.
As Amazon CEO Jeff Bezos reported in his annual letter to shareholders, the company has over 200 million Prime subscribers globally. For its part, Amazon had claimed in January of next year that it had more than 150 million Prime subscribers internationally.
Amazon’s CEO Jeff Bezos did not disclose more specifics on the company’s enormously successful Prime programme, according to people familiar with the matter. However, he did provide some startling statistics regarding Amazon’s shopping activity: Amazon customers do half of all their purchases in fifteen minutes or less, and 28% of their purchases are completed in three minutes or less.
For many of those transactions, it’s probable that customers ordered it because of Prime’s convenient and free two-day shipping and returns (a known contributor to higher conversion rates). With the additional feature of one-click buy on Amazon.com and its app, customers may speed up their purchases at retail locations as well. In fact, according to the Digital Commerce 360 and Bizrate Insights poll of 1,000 buyers, 26% of U.S. online consumers said they purchase on marketplaces versus retailers’ websites because of shopping efficiency such as one-click transactions and saved payment information. Amazon is easily the No. 1 online marketplace in the United States.
According to research firm Consumer Intelligence Research Partners (CIRP), however, new estimates of the Amazon Prime reward programme were revealed on the same day. According to CIRP’s projections, the number of Amazon Prime subscribers in the US increased by 24.6% to 147 million by March 2021.
According to Mike Levin, partner and co-founder of CIRP, “Amazon Prime membership increased at a quicker rate in the whole year of the epidemic than in the previous three years.” Customers who live at home found other features and perks, such as the ability to ship packages, to be highly beneficial, given the widespread lifestyle and buying constraints caused by the pandemic.
Prime membership is critical to Amazon because of the number of benefits it offers. As a result of an increase in subscription revenue made up mostly of Prime membership fees, the retailer’s subscription revenue was $25.21 billion in 2020, which was a 31.2% increase over the previous year. 6.5% of the company’s revenue last year was derived from subscription revenue, which was 6.8% in 2019 and 6.1% in 2018. Amazon’s net revenue increased by 37.6% from $280.52 billion in 2019 to $386.06 billion in 2020.
Additionally, customers who become members of Prime can be confident that they will remain members, as these customers are less likely to terminate their subscription. Furthermore, according to CIRP, 69% of customers who signed up for a free trial end up signing up for a paid membership, and that’s an increase from 64% reported in the third quarter of this year. A total of 93% of consumers who have joined up for the programme continue to pay for it after one year, while 98% of people who have been Prime members for two years. CIRP estimated that after one and two years, the renewal rate remained the same compared to Q3 2020.
According to a Digital Commerce 360 and Bizrate Insights poll of 1,000 U.S. online buyers in June, prime is the main incentive that customers use to shop on Amazon. More than half of consumers (51%) who purchase on Amazon give up to five reasons. Of those, one of the top reasons is that Amazon Prime members can get free shipping on most purchases. People found the option to find things fast to be the second most common reason, accounting for 46% of respondents.
Not only do many Prime members love the loyalty programme, but they also consider it rather beneficial. An RBC Capital Markets study of 2,800 users in June found that, of consumers who signed up for Prime for at least a year, 70% were either “very content” or “very satisfied” with their Prime experience, and two-thirds or more spent more money on Amazon as Prime subscribers.
One other thing that we learned about Prime subscribers is that over half of them are so fully committed to Prime that they will continue to use it even if Amazon increases prices a second time. In 2018, Amazon raised the price of the year-long subscription to $119 instead of $99. Fifty-four percent of the customers that were surveyed stated they would not cancel their Prime membership if Amazon raised the price to $139, whereas forty-six percent indicated they would.
With Prime, launched in February 2005, no other e-commerce service offered such great value: Customers who paid $79 a year received two-day shipping for any Prime-eligible item, rather than having to pay $9.48 to get one item within two days. the theory was that customers would feel compelled to pre-pay for “free” and “fast” shipment in order to make sure they received their money’s worth.
By the time Prime had been in existence for a year, the store was already promoting the advantages of the service. During Amazon’s fourth quarter 2005 earnings call in February 2006, former senior vice president and CFO Thomas J. Szkutak mentioned that Amazon Prime subscribers had boosted their spending in a variety of areas, such as electronics, kitchen, and health and personal care. He told shareholders on the same call that customers utilising Amazon Prime had saved $475 million in delivery costs.
In recent years, Prime has introduced more privileges, such as access to free and fast shipping, free streaming television series, movies, and music, as well as exclusive discounts at Whole Foods shops. This includes Prime members as well.
61% of the respondents had joined up for a Prime membership, and of those, 16% had done so specifically for Prime Day and planned to make another purchase in June 2020; 11% of respondents used their Prime advantages at Amazon-owned grocery chain Whole Foods. 9% of respondents joined Prime on Prime Day in 2020, and 73% of respondents were already Prime members beforehand (which was held Oct. 13 and Oct. 14 in 2020).
By guaranteeing rapid shipping, Amazon has set itself apart from traditional brick-and-mortar stores. Even in the early stages of the coronavirus pandemic in the US, people were buying more on Amazon because they were in dire need of supplies. In a Digital Commerce 360 and Bizrate Insites June poll, 43% of consumers said Amazon is a more significant resource to them because of the pandemic, 19% said they could count on Amazon for next-day delivery, and 6% said same-day delivery was critical to them.