Amazon has invested mightily in its $99/year Prime membership program and a new study by market research firm Field Agent helps explain why.
The No. 1 e-tailer lavishes two-day, Sunday and in many cases same-day delivery on its Prime members, along with access to millions of songs, video content and books, all at no extra charge.
In return, the Field Agent report shows, Amazon gets a deep and loyal customer base with a propensity to spend.
How many Prime members are we talking about? Amazon had kept that figure close to the vest, but in its recent 10-K the company for the first time broke out revenue from “retail subscription services,” to the tune of $6.4 billion, the researchers said. Based on back-of-the-napkin math ($6.4 billion divided by the annual $99 subscription fee), Field Agent came up with approximately 65 million paying members.
The researchers then queried 587 of them on their Amazon purchase patterns over the past six months. Here’s what they found:
*Prime members spent $678 through Amazon on average over the six-month period — which included the holiday selling season — reflecting 32 separate purchases with an average basket of $21.19 (see chart, below);
*78 percent of members purchased consumer electronics on Amazon through the program during the six months, while 54 percent bought home goods;
*56 percent of respondents share their Prime accounts with spouses or live-in significant others, and 17 percent share their accounts with other households; and
*89 percent pay the $99 annual membership fee while 11 percent pay on a month-to-month basis ($10.99, or $132 a year).
The survey also showed that “free” shipping and Prime Video and Music are the most used benefits, cited by 98 percent, 80 percent and 49 percent, respectively, over the six-month period.
“We felt it was important to dig a little deeper into the actual purchase behavior of Prime members,” said Field Agent co-founder and chief strategy officer Henry Ho, given that Amazon Prime membership may extend to half of all U.S. households by 2020, according to some industry estimates.
The survey was conducted Feb. 18-19 among participants who verified their Prime bona fides with photos/screen shots of their membership status and recent purchases.