Why Amazon Prime Is Such a Great Deal – for Amazon
Business + Economy

Why Amazon Prime Is Such a Great Deal – for Amazon


Consumers who cough up the $99 a year for Amazon Prime memberships spend almost twice much as other shoppers at the online retailer.

The 54 million Americans who pay for Prime membership spend an average of $1,100 a year on Amazon purchases, compared to an average annual total of $600 by non-members, according to new data from Consumer Intelligence Research Partners.

Related: Amazon vs. Walmart: A Graphic Look at the Numbers

It’s been 11 years since Jeff Bezos first announced the membership deal that started with free shipping and has grown to include streaming video and music as well as e-books.

Almost half of U.S. Amazon customers (47 percent) now pay for Prime membership, with 7 million new customers signing up for the service in the fourth quarter of 2015. Membership grew 35 percent from December 2014 to December 2015, down from a 54 percent growth rate in the previous year.

The slowdown in growth reflects a maturing market and means Amazon needs to place a big focus on customer retention, CIRP partner and co-founder Mike Levin said in a statement. “Many see free two-day shipping as the primary reason customers try Amazon Prime, enhanced streaming video and other offerings provide added incentive for members to continue to renew.”

With 54 million American members, Amazon Prime has a greater potential U.S. customer base for streaming content than Netflix, which has 44 million U.S. members, although not all Amazon Prime members use that part of the service.

Prime is also continually testing other features, such as grocery delivery. Last week Amazon announced that it would launch restaurant delivery service to Prime Now members in Chicago.