With Amazon.com Inc.’s (NASDAQ: AMZN) fourth annual Prime Day set to kick off on Monday, a new report indicates that the event couldn’t have come at a better time.
Analysts at Consumer Intelligence Research Partners (CIRP) reported Friday that their research indicates that Amazon Prime membership growth dipped to 12% in the past 12 months, down from 35% in the previous period and around 50% in each of the two prior 12-month periods. CIRP estimates that U.S. Prime membership totals about 95 million.
In Amazon’s annual letter to shareholders in April, CEO Jeff Bezos said that the company had more than 100 million Prime members, but that is a global total. That was the first time the company had ever released Prime subscriber count.
CIRP researchers also reported that Prime members spent an average of $1,400 with Amazon last year, up from $1,300 in the prior year. Non-members spent an average of $800 compared to an average of $700 in the previous year. And the longer a customer has been a Prime member, the more that customer spends—members with a tenure of more than three years spent an average of $1,500 last year, compared with an average of $900 for members with less than three months in the club.
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CIRP partner and co-founder Mike Levin noted:
From Amazon’s perspective, Amazon Prime members improve with age. As more Prime members reach their third, fourth or even longer anniversary, average spending should increase. … Stronger than a subscription business model, Amazon uses the power of member affiliation and a desire to amortize their fixed cost of membership across more member benefits, mostly by buying more stuff from Amazon.
With 95 million U.S. members, and assuming one Prime membership per household, Amazon Prime has signed up about 75% of all U.S. households. Membership growth rates have to slow down—there just aren’t that many more people to sign up. But the upside is that the longer a member sticks with Prime, the more that customer spends. From Amazon’s point of view, it’s all about customer spending, and on that score, Prime couldn’t be a bigger success.
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