A deeper look at Amazon Prime
March 21, 2013 04:43 PM
Amazon Prime has some 10 million members, and those shoppers last month spent, on average, 5.6% more per order than other consumers shopping with the e-retailer.
Those are among the findings from two reports this month that describe the Amazon.com Inc. fulfillment program, which offers two-day shipping and streamed access to more than 25,000 TV shows and movies to consumers who pay the $79 annual fee. Amazon gives few details about the size, order values and profitability of the 8-year-old Prime program, though the merchant did say in August that Prime accounts for more shipped items than does the e-retailer’s Free Super Saving Shipping Program. That program, launched about a decade ago, offers free shipping for orders of more than $25.
Amazon is No. 1 in the Internet Retailer Top 500 Guide.
The recent estimate about the number of Prime members comes from a report released earlier this month by financial data firm Morningstar Inc. and Consumer Intelligence Research Partners LLC. The report describes how the firms arrived at the estimate, a calculation that started with an early 2012 report from Bloomberg that cited unidentified Amazon sources as saying Prime had up to 5 million members then. From that baseline, Morningstar then analyzed Amazon financial reports to estimate the unearned revenue contributions from Prime, which helped to determine the estimate for the number of members, based on the membership fees. The Morningstar estimate also takes into account the number of Prime customers Amazon could have gained through such tactics as giving away trial memberships to consumers who bought Kindle Fire tablets—the report estimates Amazon has sold 10 million since late 2011—and adds that up to 40% of those trial members upgrade to full memberships.
The Morningstar report goes onto to say that Prime members keep coming back to shop, and they also spend more. In the three months preceding a November survey for the report, 34% of recent Amazon shoppers were Prime members, compared with 33% who were owners of Kindle Fires, 32% who owned other Kindle devices, and 13% who had Amazon-branded Visa cards. The survey also found that Prime members spend more: approximately $1,200 annually (that includes the $79 membership fee) compared with $600 for other Amazon customers.
Another recent report, this one from eDataSource, says that in February, Prime members spent, on average, $48.56 per order, 5.6% higher than the $45.98 spent by other Amazon shoppers. The market research firm based its findings on an analysis of 35,000 Amazon receipts from its consumer panel (the research covered the December through February period, though the findings highlighted here are for February). The report adds that Prime members purchased an average of 1.63 items per order in February, compared with 1.46 items for other Amazon shoppers. In February, eDataSource says, a Prime customer, on average, spent $179.60, 74.5% higher than the $102.90 spent by non-Prime shoppers.