CIRP shines a light on the true value of Prime for Amazon
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CIRP shines a light on the true value of Prime for Amazon

Amazon Prime, the Ecommerce giant’s incredibly popular subscription service, offers its customers a great deal. They get free postage and packing, access to the company’s streaming video on demand and music services, and more. But it’s an even better deal for Amazon – it has long been known that Prime customers spend more each year than their non-Prime counterparts. Now, researchers at Consumer Intelligence Research Partners (CIRP) have conducted a study that demonstrates just how much of a boon these subscribers are to Amazon.

Amazon’s share price has appreciated by 32% so far this year

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SOURCE: Yahoo Finance

In the U.S. alone, CIRP estimates that Amazon has 90 million Prime subscribers. This is an incredible number of people that have put their money where their mouth is when it comes to buying into the Amazon proposition, and they’re worth an equally incredible amount to the company. At $99 for a year’s membership, the scheme is bringing in almost $9 billion before anyone’s even bought anything!

CIRP said that around 63% of Amazon’s U.S. customer base is made up of Prime members – and the total subscriber base has risen by an impressive 38% in the last 12 months. The scheme is popular, and it seems to remain popular, as Amazon’s Prime members are incredibly loyal: 95% of current subscribers told CIRP they were planning to renew next year (that’s up from 94% last year).

What’s more, these customers make the most of it, spending almost twice as much as non-Prime members every year. That means $1,300 on average (against $700 for non-Prime members). It’s a lot of free postage and packing to give away – but there’s no denying that, from Amazon’s perspective, it’s worth it!

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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