Jeff Bezos, CEO, Amazon announced today that the company has reached at least 20 Mn members for its USD 79/year subscription program, Amazon Prime. Also, this holiday season was the best ever for Amazon, with more than 36.8 Mn items ordered worldwide on Cyber Monday, which is a record-breaking 426 items per second.
Amazon’s Prime service has been mainly responsible for bringing in repeat customers, and also for the surge in sales this festive season. More than a million customers became new Prime members in third week of December itself.
“Amazon Prime membership continues to grow, and we now have tens of millions of members worldwide. They benefit from all-you-can-eat free two-day shipping on millions of eligible items and our members have a voracious appetite,” said Jeff.
What is Amazon Prime?
Amazon Prime is a membership shipping program for the Amazon online store. An annual membership fee, makes the user eligible for shipping of purchases from Amazon. Two-day shipping is free while one-day shipping costs USD 3.99 per item, with no minimum order size.
As mentioned in the image above, although the membership price is slightly steep, but it comes with additional benefits such as unlimited streaming of movies and shows with Prime Instant Video, and access to Amazon’s lending library for Kindle owners.
Why is it gaining so much traction?
Overhead shipping costs are a big hassle for frequent online shoppers, especially when customers end up buying more than what they want, to be eligible for free shipping. Hence one time payment eases things. Prime users can order the most basic of things, even everyday items online, without having to go all the way to a store to buy something.
“Amazon shipped to 185 countries this holiday.”
Also, Prime offers online movies and shows streaming as well, and is giving a competition to Netflix in US. Although, this service isn’t available in most of the countries, it will certainly be an added bonus when it will be.
Amazon Kindle and Prime lending go hand in hand, and is a useful facility for avid Kindle eBook readers when it comes to cost saving.
What are the downsides on Amazon Prime?
This premium shipping service has many benefits restricted to a few countries only.
If one doesn’t buy from Amazon often, then the once a year investment could be a waste.
Amazon Prime streaming is cheaper than Netflix and Hulu, but the video collection is not as vast.
The Prime effect
Amazon is giving Prime the credits for its ‘Record setting holiday’. Further,besides the offers and benefits being given, the overwhelming increase in the number of Amazon Prime members could be attributed to-firstly, the free 30-Day trial period where the reluctant users can try Prime before paying the USD 79 fee and secondly to the fact that shipping in this festive season without Prime benefits was much more expensive, hence the surge.
Although Amazon hasn’t shared the exact figures of how much revenue it earned, but it has given a long list of the most purchased items on its sites, ranging from laptops to books to perfumes, one can read the complete list here.
Catering to millions of customers across 185 countries in roughly a month’s time is an accomplishment. Now the question arises, if the marketplaces in other countries, such as India, are capable of running such models.
Will such a model work in India too?
Logistics undoubtedly form one determining factor in any online retail business. In India marketplaces such as Flipkart, Tradus, Infibeam, Snapdeal etc. have different vendors selling on their platform. The companies have tie-ups with several different companies for their logistics operations, Flipkart even has its own logistics service eKart.
A membership fee with benefits like that offered by Amazon Prime could be a good idea for such companies because it’ll help them to build customer loyalty by getting repeat buyers, increase the online customer base due to the additional perks being given and in turn have increased average sales per vendor and overall revenue for themselves.
Implementing such a model could however still be a tough task, since assessing the consumer preferences would be an issue, plus since paid online streaming is still in nascent stage in India. These companies would have to come up with other alternatives to convince consumers of this concept.
It is yet a possible and profitable opportunity for them, now it’ll be interesting to see, which marketplace in India comes up with its own version of Prime.
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