Dive Brief:
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Amazon took the first working day of the new year to boast about its accomplishments in 2017, particularly regarding the Prime membership program — saying that more new paid members joined Prime worldwide than any previous year.
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More than 5 billion items shipped with Prime in 2017 via the program's free same-day, one-day, and two-day shipping. That's in part thanks to the fact that more than 100 million items are eligible for Prime's free two-day shipping in the U.S., Amazon noted, and Prime members used their digital benefits "more than ever before," according to a press release.
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The company also sold a lot of devices this year, and said that customers have embraced voice-assisted shopping. The e-commerce giant's Fire TV Stick and Echo Dot were the best-selling products purchased by U.S. Prime members from any manufacturer in any category across all of Amazon last year, the company said. Prime members in the U.S. bought "millions" of Amazon devices, according to the release.
Dive Insight:
Amazon loves good press — the company often includes a long list of accomplishments, big numbers and boastful stats in quarterly reports, and the New Years list comes on the heels of a post-holiday press release noting how more than four million people started Prime free trials or began paid memberships in one week over the holiday shopping season.
Not included on Amazon's exhaustive lists, however, is the actual size of its Prime membership base — the company hasn't ever revealed that number. Consumer Intelligence Research Partners pegs it at 90 million in the U.S., but Moody's Investors Service analysts threw cold water on that number this summer, calling such estimates "seriously overstated," "highly improbable" and made "in the absence of any real guidance from the company itself."
Whatever its size, it may have peaked, according to Morgan Stanley analysts, which this year found that membership in the U.S. flattened in 2016. Prime membership grew 14% the year between the fourth quarter of 2015 and the same period in 2016, but just 40% of the 1,000 U.S. adults surveyed were still Prime members, according to the report. Amazon may have found a way to ensure that most of those members stick around, though. The company suggested that its entertainment perks have gained traction, noting that Amazon Prime Video "had a record year as a global streaming service" and members used benefits like Prime Music and Prime Reading more than ever before.
Beyond bragging rights, it actually is important that Amazon's non-shipping perks gain traction with Prime members. Amazon may have shipped 5 billion items via Prime, but the value of those items is known, and it's not clear how many were shipped profitably. The company continues to invest in those operations, saying Tuesday that its fulfillment and shipping network increased by more than 30% in square footage last year. In the U.S. alone, more than 6,000 trailers and 32 Amazon airplanes were in place to serve Prime members during the year.
Whether or not free shipping is eating into margins, Amazon needs it. Research suggests that Prime members are there for the free two-day delivery (even faster in some areas): A massive 82% of Amazon Prime members would cancel their membership without free two-day shipping, according to a November report by SmarterHQ.