Big Revenue, Bigger Costs
The Prime program has been a cornerstone of Amazon‘s (NASDAQ:AMZN | AMZN Price Prediction) revenue stream since it first began in 2005, offering unlimited, two-day shipping on a large selection of items for an annual fee of $79. Last year it generated a staggering $44.3 billion, up from $40.2 billion in 2023.
This subscription service, a juggernaut in e-commerce, offers members free shipping, access to Prime Video, Prime Music, Kindle Unlimited, and a host of other perks, making it a compelling deal for millions. However, the program’s financials tell a different story.
In 2024, Amazon’s shipping costs soared to $95.8 billion, compared to $89.5 billion in 2023, dwarfing the revenue from Prime subscriptions. While Prime drives customer loyalty and higher spending — Prime members spent an average of $1,170 in 2024 versus $570 for non-members — the program likely operates at a loss. To address this gap, Amazon is now tightening its belt, making bold moves to recoup some of the shortfall.
Ending the Prime Invitee Program
Starting October 1, 2025, Amazon will discontinue its Prime Invitee Program, a feature launched in 2008 that allowed Prime members to share free shipping benefits with others outside their household.
The company announced on its “Help & Customer Support” page that “Prime benefit sharing through the Prime Invitee program will end on 1 Oct. 2025. Prime invitees will lose access to the shared Prime delivery benefit, but can use Amazon Family instead.”
The Amazon Family program, however, is far more restrictive, limiting sharing to one additional adult in the same household and up to four child profiles. This shift effectively ends the ability to extend free shipping to friends or family living elsewhere, a move that could push more users to purchase their own Prime subscriptions.
Following the Netflix Playbook
Amazon’s decision mirrors strategies adopted by other companies, notably Netflix (NASDAQ:NFLX), which cracked down on password sharing to boost its subscriber base. Netflix’s efforts paid off, with subscriber growth exceeding analyst expectations in recent quarters.
Amazon appears to be taking a page from this playbook, aiming to convert Prime invitees into full-fledged subscribers. At $139 annually, the cost of a Prime membership may seem steep compared to Netflix’s $7.99 monthly ad-supported plan or $17.99 ad-free option. However, Amazon offers flexible payment plans: $14.99 per month for standard accounts, $7.49 for qualified students, and $6.99 for those on government assistance programs.
These options lower the barrier to entry, making it easier for former invitees to join as paying members. The move, though, is a calculated effort to drive subscription growth, especially as competition from Walmart’s (NYSE:WMT) membership program intensifies.
A Response to Stagnating Sign-Ups
The decision to end the Prime Invitee Program comes on the heels of disappointing Prime membership growth. According to Reuters, Amazon’s 2025 Prime Day — extended to four days from July 8 to July 11 — saw 5.4 million U.S. sign-ups, some 116,000 fewer than the previous year and 106,000 below the company’s internal target, a roughly 2% decline.
Despite Amazon’s claim of “record-breaking sign-ups” over a 25-day period around Prime Day, the data suggests a slowdown in subscriber growth. With tariffs from the Trump administration impacting sellers and discounts, and rivals like Walmart offering competitive fast-delivery programs, Amazon is under pressure to bolster its Prime base.
Ending benefit sharing is a clear strategy to nudge non-members toward subscriptions, even if it risks alienating some loyal customers.
Key Takeaway
Amazon’s move to end the Prime Invitee Program appears to be a calculated money grab to boost subscriber numbers. While the $44.3 billion in Prime revenue is significant, it falls far short of covering the $95.8 billion in shipping costs. This change may drive more sign-ups, narrowing the financial gap, but it’s unlikely to fully offset the deficit.
Given Amazon’s history of raising subscription fees — most recently from $119 to $139 in 2022 — another price hike wouldn’t be surprising. As Amazon balances growth with profitability, this decision underscores its focus on maximizing revenue in a competitive market, even if it means tightening the screws on long-standing perks.
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