Outsiders have questioned whether Amazon.com Inc. (NASDAQ: AMZN) makes much money from its Prime membership service. Maybe Amazon underprices its benefits, or gives away too many services for free. A new survey shines light on the potential power of Prime. One third of its members buy something from Amazon at least once a week
According to Feedvisor’s Amazon User Study 2016:
● Amazon uses aren’t exclusive: 61 percent of Amazon users have also made a purchase on a brand or retailer’s site, such as Walmart.com or Gap.com, in the last year.
● Prime members shop Amazon more often: About a third of Prime members make purchases on Amazon at LEAST once per week, compared to 5 percent of non-Prime members.
● Shipping costs are a deterrent to sales: More than 85 percent of customers consider shipping charges to be a deal-breaker.
● Amazon users consider third-party sellers to be reliable: Nearly 80 percent of Prime and 60 percent of non-Prime members have purchased from third-party sellers.
Prime costs users $10.99 a month. At the same time, it costs Amazon a great deal. Amazon has gone into highly expensive in-house exclusive programming to compete with Netflix Inc. (NASDAQ: NFLX). It offers unlimited photo storage, free, unlimited use of Audible, two million free songs, and a massive library of streaming video.
If the Feedvisor data is accurate, Prime may be among the best ideas Amazon has ever had.
Methodology: The study was conducted by Feedvisor, the algorithmic repricing and revenue intelligence company. It surveyed more than 1,500 U.S. Amazon users and showed how they rely on the online marketplace for price and product information during their shopping journeys.