Amazon’s Prime membership grows to 90 million in U.S.
The Census Bureau pegs the number of households in the U.S. at just under 126 million with 2.53 members per household on average. Based on new research, one could assume a good many of those households now contain someone who is a member of Amazon Prime.
The e-tailing giant has grown the ranks of its Prime memberships to 90 million in the U.S., with 63 percent of all shoppers on Amazon belonging to the program, according to Consumer Intelligence Research Partners (CIRP). The number of memberships is critical to Amazon’s sales success as the average Prime program participant spends $1,300 per year, nearly twice the roughly $700 a year spent by non-members.
“Membership grew six percent in the most recent quarter, the same rate as in the June 2017 quarter, and better than the three percent in the year-ago September 2016 quarter,” said Josh Lowitz, partner and co-founder of CIRP, in a statement. “Over the past twelve months, Prime grew by 38 percent, the same growth rate as in the same twelve-month period the year before, from October 2015 to September 2016.”
While free two-day deliveries are generally mentioned as the most important element of Prime memberships, Amazon has added a number of perks including access to free videos on the site to build demand. Renewal rates among Prime members, according to CIRP, remains very high with 95 percent of those surveyed saying they would “definitely” or “probably” re-up at the end of their current subscriptions.
“The share of members that indicate they are likely to renew for another year has remained high for several quarters, always comfortably above 90 percent,” said Mike Levin, partner and co-founder of CIRP. “In fact, in some quarters, literally no customers in the sample indicated they would definitely not renew their Amazon Prime membership.”
Others, particularly Walmart, have tried to match fire with Amazon Prime. In January, the retailer announced it would offer free two-day shipping with no annual fee for orders with a minimum purchase of $35 (down from $50) on walmart.com. Amazon came back and lowered its minimum to $25.
- Amazon Prime Hits 90 Million US Members As Growth Reaches Limits, Almost All Members Intend to Renew – Consumer Intelligence Research Partners, LLC
- Online and Amazon to grow more dominant over the next decade – RetailWire
- Amazon Prime’s retention rates are just sick – RetailWire
- Will free two-day shipping give Walmart an edge over Amazon – RetailWire
- Wal-Mart Sees ‘Second-Mover Advantage’ in E-Commerce – The Wall Street Journal
DISCUSSION QUESTIONS: Do you see Prime as the most important ingredient in Amazon’s formula for grabbing up market share? At what point do you see membership saturation maxing out? How can other retailers engaged in e-commerce compete with Amazon’s Prime program?
Phil MasielloFounder and CEO, CrunchGrowth Revenue Acceleration Agency
Phil MasielloFounder and CEO, CrunchGrowth Revenue Acceleration Agency
Phil MasielloFounder and CEO, CrunchGrowth Revenue Acceleration Agency
Phil MasielloFounder and CEO, CrunchGrowth Revenue Acceleration Agency
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10 Comments on "Amazon’s Prime membership grows to 90 million in U.S."
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President, Max Goldberg & Associates
Prime is a key driver in Amazon’s success, but at some point the program will hit saturation. But will that really matter? With Prime households spending almost twice as much on Amazon as non-Prime households, the company has significant revenue growth in its future. Amazon will dominate e-commerce, and influence all retail, for years to come.
Chief Amazement Officer, Shepard Presentations, LLC
Nothing in this update surprises me. Prime is a key ingredient to getting Amazon customers to feel connected. That connection is enough to get customers to be repeat customers who buy more. Amazon offers value in their music and streaming video programs — and more. Sure there will be a point where membership growth slows. At that point it will be about retention.
There are opportunities to compete online with Amazon. The biggest is to build your own loyal community. Work that customer base by giving value and amazing service. And be easy to do business with. That’s a start.
President, Integrated Marketing Solutions
What most retailers completely miss about Amazon is that it’s all about their ecosystem. Prime is at the core of the ecosystem in both attracting and retaining customers. Where else can consumers go for the same shopping convenience, free shipping, free music and free cloud storage? Prime is more than a shopping portal or loyalty program … through Echo it permeates every aspect of a consumer’s home and lifestyle.
Founder and CEO, CrunchGrowth Revenue Acceleration Agency
Founder and CEO, Bobsled Marketing
Prime is a significant driver in Amazon’s flywheel. The psychological lock-in effect of Prime has led Amazon to where it is today. Members want to make their membership worth it, so turn to Amazon first when shopping. That’s not the only element though: extreme product selection, fast delivery and customer service are just two other factors that drive loyalty to Amazon. It is still incredible to me how the Prime membership numbers continue to creep up, way past half of all U.S. households. Even after Amazon reaches technical saturation, they will start extending their flywheel reach elsewhere: international markets, currently underserved demographics (teens, elderly).
President and CEO, Stealing Share
Amazon Prime is a transparent transaction. This means that we don’t think of it as a membership, we see it as a value-added service. Because it seems to be aimed at making purchases easier. It is brilliant branding by Amazon.
Grow, growing … great — Amazon.
Independent Board Member, Investor and Startup Advisor
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Managing Director, GlobalData
Prime is a central plank of Amazon’s growth and success. The genius of the scheme is that it is not simply a “free delivery” subscription, it provides a whole host of benefits which make it excellent value for money. This encourages uptake and renewal.
Once in the Prime ecosystem, members are more likely to buy from Amazon — which can also gather more information to personalize marketing and stimulate further buying.
President, Protonik