business news in context, analysis with attitude

Amazon founder/CEO Jeff Bezos, in his annual letter to shareholders, has revealed a number that has long been closely held by the company - that more than 100 million people globally pay for Amazon Prime membership, which gives them expedited shipping as well as access to other services. Prime members also are said to spend more than twice as much annually on Amazon than non-Amazon members.

In its story, the Wall Street Journal writes that “Amazon’s story to investors has largely been one of scale. In the company’s view, having a large numbers of customers and clients has allowed it to spread costs broadly and continue investing in technology. This view is shown in its growing Prime membership, through its massive cloud-server business and how it lets third-party sellers onto its platform to compete against itself for customers. Amazon said Wednesday that a majority of goods shipped world-wide on its platform are now from these sellers.”

Two other interesting passages from the Journal story:

• “Last year Amazon brought in $9.72 billion in revenue directly from subscription services, including fees from Prime members. The company also benefits from Prime members who tend to spend more money on Amazon than nonmembers and do so more frequently.”

• “The letter also said more new members joined Prime last year than in any previous year. Amazon has been expanding Prime internationally, including to Mexico, Singapore and the Netherlands in 2017.”
KC's View:
Prime has always been the best customer loyalty program ever … creating an ecosystem that gets people invested in it, and then rewards them for it, creating a wheel that keeps turning and generating more energy and spinning off more opportunities.

This is very tough to compete against. Not impossible, but tough, and getting tougher.