Dive Brief:
-
More than half of Amazon shoppers across the U.S. have signed up for Prime membership heading into Tuesday's Prime Day sale event, according to new estimates from Consumer Intelligence Research Partners cited by Quartz.
-
Prime membership in the U.S. increased to 63 million by the end of June, up from 44 million at the same time last year, representing 52% of Amazon's total American customer base, CIRP notes.
-
Prime membership is growing fastest among wealthier households: More than 70% of households with annual incomes topping $112,000 have a Prime membership, according to Deutsche Bank. In addition, 75% of Prime members convert when visiting the Amazon website, compared to 13% of non-Prime members, according to a mid-2015 study from Millward Brown Digital.
Dive Insight:
Impressive stats regarding Amazon’s Prime membership growth are no longer all that stunning, if only because they continue to pile up. Amazon itself doesn’t release its Prime numbers (except to say that membership is in the “tens of millions”), but these new estimates from CIRP jibe with others from other sources, including recent data from Deutsche Bank estimating that Prime spending accounts for nearly 60% of Amazon's gross merchandise value. That is even though Prime subscribers, according to Deutsche Bank's estimate, make up less than 20% of the e-retailer’s customer base. CIRP's new numbers challenge that estimate and could better explain the high GMV percentage.
Prime offers customers a wide range of perks, from free shipping to streaming video to access to exclusive deals (including Prime Day, the now-annual retail holiday Amazon launched in mid-2015). “We want Prime to be such a good value, you’d be irresponsible not to be a member,” Amazon founder and CEO Jeff Bezos wrote this spring in his annual letter to shareholders,
The Prime shipping program and the complementary Fulfilled by Amazon third-party seller delivery service are the engines driving customer adoption, Piper Jaffray senior research analyst Gene Munster said last month at an Amazon-themed workshop ahead of the annual Internet Retailer Conference + Exposition.
“Prime Now [free two-hour delivery] is currently available in 37 cities, and Same-Day Delivery is now is 28 cities,” Munster said. “Amazon is trying to take away the advantage of brick-and-mortar, which is instant gratification.”
Prime’s success is prompting Amazon to bolster its delivery capabilities, Munster also said, noting that the company now operates 123 fulfillment centers nationwide, adding new facilities at a rate of about 15 per year. Amazon also operates 23 sort centers (waystations between fulfillment sites) across the U.S.
