Amazon Prime Growth Flattening Out in US
There’s no argument that Amazon.com Inc. (NASDAQ: AMZN) customers who are also members of Amazon Prime spend more with the e-commerce giant than do non-Prime customers. That’s why a flatter growth rate in Prime memberships may be a cause for concern about the company’s future revenue growth.
According to a new report from Consumer Intelligence Research Partners (CIRP), Amazon added just 2 million new U.S. Prime members in the third quarter of 2018. The program’s annual growth rate for the past 12 months is 8%, the lowest annual rate since CIRP began tracking Prime membership in 2012.
CIRP partner and co-founder Josh Lowitz said:
The quarterly growth has remained in a narrow 1-2% range for the past four quarters, including the most recent quarter, which included Prime Day. The first one or two Prime Day events generated new members. In recent years, Amazon has used the promotion to boost sales of Amazon devices and products that further bind its customers to the Amazon ecosystem.
Prime members spend an average of $1,400 annually at Amazon compared with average spending of $600 by non-Prime members. They also shop more frequently — 26 times a year compared with 14 times — than do non-Prime members and spend more per visit than nonmembers — $55 compared to $42.
Mike Levin, CIRP partner and co-founder, added:
In the US, Amazon now relies on monetizing its Prime members, rather than growing the Prime membership base. Prime members have always shopped more frequently, as they seek to derive the most value from their Prime membership by using the free 2-day shipping benefit on more purchases. Once affiliated, these Prime members spend more per visit, by buying more items per trip and more expensive items each time.
Amazon Prime membership has now spread far beyond the early adopters who were presumably the most committed Amazon shoppers. Despite that, Prime members continue to out-shop and out-spend their non-member complement.
At the end of September, Amazon Prime had 97 million U.S. subscribers, and 61% of all Amazon customers are Prime members according to CIRP estimates.