Analysts in recent years have tended to get pretty strongly behind Amazon.com. Some of that, I've suspected, has been lessons learned from the early years when many questioned whether Jeff Bezos and company would make it. It turns out Amazon did and were pretty darn successful in the process.
Now comes word that Amazon's Prime subscription plan may not be nearly as successful, by half, as many Wall Streeters have come to believe.
According to three unnamed sources, the number of members of the Prime program is somewhere between three and five million. That's a far cry from the estimated seven to 10 million number that many investment firms had come to accept as fact.
The Prime program has been promoted as a key loyalty driver for Amazon. Consumers get guaranteed two-day delivery on all orders for a year based on an annual fee of $79. Subscribers also get access to Amazon's streaming television programs and other content with their membership.
According to David Spitz, president of ChannelAdvisor Corp., the longer an Amazon customer stays with the Prime program, the more they spend on the site.
"After a couple of years, a Prime subscriber may be spending six times or more," Mr. Spitz told Bloomberg News.
Earlier this week, EcommerceBytes, citing research by Cowen and Company, reported that 12 percent of Amazon customers, following a free trial period, are Prime subscribers. Cowen has put its estimate of paid Prime members at 11 million with the potential to one day exceed 50 million.
Jim Friedland, an analyst with Cowen, wrote, "To put our Prime user target in perspective, the two largest warehouse clubs in the U.S. have achieved similar membership levels while offering fewer benefits: Costco has 65 million members ($55 a year) and Sam's Club has 47 million ($40 a year). Amazon Prime members pay $79 per year."