Amazon Prime continues to aggressively grow retail market share – here are seven secrets of its success from the online retailer’s 2017 Q4 results call.
Despite analysts’ suspicions that Prime, Amazon’s flagship subscription service, has been running out of steam, the company revealed it is not only growing, but doing so in style.
Here is how Amazon is painting the world in Prime colours.
1. Record Prime membership figures
Amazon says it signed up more new Prime customers last year than ever before. Amazon keeps exact global subscription numbers a very close secret, but that doesn’t stop analysts attempting to estimate the figure. The general consensus is that US Prime members rose to around 90 million in September 2017 from 63 million the previous June – an impressive increase by any yardstick.
2. Prime members spend double
Members spend nearly double the amount spent by non-members. It seems that once customers have paid their annual subscription and gained access to the Amazon retail ecosystem they’re intent on getting their money’s worth. Estimates suggest that US non-members spend around $700 dollars annually, but this is dwarfed by the $1,300 spent by members.
3. Five billion parcels
Amazon announced it shipped more than five billion items globally through Prime in 2017. That’s a colossal figure considering there are 7.6 billion people on the planet. But it wasn’t all plain sailing for Amazon during 2017. A spike in orders toward the end of the year put huge pressure on delivery firms around the world, leading in some cases to late deliveries. There was also talk of a formal investigation in the UK where the company failed to meet promised delivery times.
4. Rapid expansion
Amazon continues to break virgin territory across the globe, including in Mexico, the Netherlands, Luxembourg and Singapore alone this year. This takes the number of countries with Prime to 14. In Mexico, the world’s tenth most populous countries, Amazon has taken the lead in e-commerce and launched its subscription service in March.
5. Growing membership benefits
The Prime offering continues to grow at an astonishing rate. 12 years ago, Amazon launched its subscription service by offering customers two-day shipping in the US. That has grown to include same-day delivery in some areas as well as bundled services such as video and music streaming, photo storage and e-book downloads. Now customers in the US could soon be offered a secure home delivery service called Amazon Key, which enables a courier to drop off a package in your home using an Amazon smart lock. A webcam installed by Amazon in the customer’s home will record the delivery and send a clip to the customer.
6. Prime enlists Alexa
Amazon made the bold claim that “millions of members across the US” are now using their voice-activated Alexa smart speakers to purchase Amazon products. Aggressive pricing both in the US and UK during Christmas peak trading has led to literally millions of homeowners snapping up cheap voice assistants such as the Echo and Dot. This has meant Amazon has effectively opened up a new front in its battle for world retail domination.
7. Membership discounts
The team at Prime has shown it is willing to offer discounts to sign up students and hopefully then keep them for life. Its student discount deal includes a six-month free trial and then half price annual subscription after that.
So, what next for the Amazon steamroller? 2018 may be the year that Prime gets physical. Greg Greeley VP of Prime recently said he will be working on the integration of Prime and Whole Foods stores during 2018. Analysts believe this is part of a move to make its subscription service a central part of the Whole Foods customer rewards programme. It is also pressing ahead with its plans to offer third-party logistics for other retailers.