If Amazon Prime was a country, its population would be bigger than Germany’s. It’s also significant because it is the first time that Amazon has revealed its actual number of Prime memberships.
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Amazon Prime started in the U.S. in 2005 as a $79-a-year membership program, which offered as its sole benefit free two-day shipping. In those days, that was a big deal (shipping costs were a major barrier to buying online), but it was only the first turn of the Prime flywheel.
Over the years, the program has expanded to other countries (starting with Germany, Japan and the United Kingdom in 2007) and added more benefits. That’s key to its success. As Bezos wrote in this year’s shareholder letter, customers are “divinely discontent. Their expectations are never static – they go up.” That’s why Amazon keeps adding value to the program. In the U.S., you get a bundle of benefits that stretches beyond free shipping to include Prime Video, storage of your precious memories on Prime Photos, free Kindle books and more.
Ever-faster speed of fulfillment is also critical. In 50 cities around the globe, Amazon offers “Prime Now,” which promises free two-hour delivery. (I live in Manhattan, and have experienced a Prime courier turning up on my door just 23 minutes after I placed the order).
Prime has fundamentally changed the way that America shops. Once consumers have paid their annual membership fee, they want to extract as much value from the program as possible. Amazon Prime becomes the default first stop on any shopping trip – which is why over half of all product searches start on Amazon.
According to Consumer Intelligence Research Partners, Prime members spend on average $1,300 with Amazon a year, about twice as much as non-Prime members. About 63% of Amazon customers are estimated to be Prime members.
We have become a nation of “Primericans,” a term I first heard used by Bryan Gildenberg, Chief Knowledge Officer of Kantar Retail. The rise of “Primerica” has happened over just the last three years, and I believe that I can pinpoint the exact day that was the tipping point.
On July 15, 2015, Amazon ran its first Prime Day Sale, a day of deals exclusively for Prime members. It was not only successful financially (“bigger than Black Friday”), but Prime Day was also a massive recruiting tool. “Hundreds of thousands” of new members signed up on Prime Day, according to Amazon’s Greg Geeley. That same day, traditional retail quivered in its boots – seemingly in response, the iconic New York toy store FAO Schwartz closed its doors on its 5th Avenue premises for the last time.
Prime Day last year was an even bigger hit, with $1.56 billion in sales. To add to Amazon’s coffers, the number one selling item on Prime Day was an Amazon product, the Echo Dot.
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Amazon is pulling different Prime levers to suit different markets around the world. In India, annual membership is 999 rupees – or about $15 – and Prime Music is included. In the UK, Prime offers free one-day shipping, not two as in the U.S. In the last 12 months, Prime has expanded to Mexico, Singapore, the Netherlands and Luxembourg.
Back in 2016, Jeff Bezos said that “we want Prime to be such a good value, you’d be irresponsible not to be a member.” Now it seems that consumers all over the globe are “acting responsibly” and signing up to Prime.