Amazon is using Prime Day discounts to entice Prime members to try newer Amazon services
July 8, 2016 02:16 PM
Amazon.com Inc. is using Prime Day—the sales event taking place Tuesday and open only to Prime members—to make sure its most valuable customers are aware of its newer services.
The e-retailer is offering Prime members who place their first Prime Now order between July 6 and July 12 (Prime Day) a $10 discount off that order and a $10 credit to put toward a future Prime Now order. Prime Now is the ultrafast delivery service Amazon launched a little over a year ago in parts of Manhattan and Brooklyn, N.Y., and which is now available in 29 U.S. cities. Internet Retailer estimates Prime Now can reach 11% of the U.S. population. (Click here to see where Prime Now and Amazon same-day delivery is available in the United States, with population estimates.) Available only to members of Amazon Prime, Prime Now offers delivery in an hour or less for $7.99, or at no cost for two-hour delivery.
Amazon also is running a similar offer for consumers who order by voice by telling their Alexa-powered Amazon device—the Amazon Echo, Dot or Tap—what they want. The offer is available from today until Tuesday. Amazon expanded the voice-based ordering capabilities of Alexa devices just a week ago to allow consumers to order from among millions of eligible products. In the run-up to Prime Day, Amazon is offering customers $10 off their first voice-based purchase of $20 or more, and it’s offering a handful of daily deals available only when ordered by voice through Alexa. More Alexa-only deals will be available on Prime Day, Amazon says. Amazon sent an email to Echo owners this morning announcing the offers.
Last week, Amazon launched a pre-Prime Day promotion to get Prime members into the habit of streaming tunes through Amazon Music. Prime members get free access and downloads of selected songs through Prime Music, and Amazon is giving Prime members a chance to meet musicians, including Carrie Underwood and The Lumimeers. The hook is Prime members need to listen to that artist’s playlist on Prime Music to enter.
Amazon has good reason to want expose Prime members to its latest services. Consumers who pay the $99 annual fee to access Prime benefits buy more frequently and spend more money on Amazon than non-Prime members. Prime members spend about $1,100 annually with Amazon, whereas non-Prime customers spend $600, according to estimates from securities research firm Consumer Intelligence Research Partners LLC.
Internet Retailer’s 2016 Online Shopping Survey, which 535 U.S. adult web shoppers took online in late April, found that 64.8% of Prime members say they place at least two orders online each month. Further, 34.2% of Prime members say they make 76-100% of their online purchases on Amazon, and 29.4% report making 51-75% with Amazon. These figures show that Prime membership makes consumers coalesce their online shopping with Amazon.
Amazon does not release membership figures for Prime but says Prime membership grew 51% worldwide last year. In the United States, Amazon says Prime memberships grew 47% in 2015. Research firm NPD Group estimates 24% of U.S. households have Amazon Prime. Investment banking firm Cowen & Co. estimates roughly 41 million—or 38% of all U.S. households connected to the internet—had an Amazon Prime account as of Q1 2016.
Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide.