Monday, September 19, 2011

Amazon Primes Its Members

I found this article on the success of Amazon Prime to be really fascinating. Amazon Prime, of course, is the $79-per-year program that offers free two-day shipping. There are free versions offered to special groups as well (students, caregivers, mothers). This seemed like a pretty good bet for Amazon to take - would most people actually spend enough to cover the costs of free two-day shipping? Or would they buy a few things and Amazon could keep the difference, like when pre-paying for rental car fuel?

Turns out, Prime customers in fact DO buy more than the average Amazon shopper - 130% more. The profit from their purchases more than covers the free two-day shipping costs - in fact, the program broke even within three months!

Amazon has long been a genius at getting people to be super loyal to their site. Between heavily discounted and even subsidized prices, proprietary hardware and software like the Kindle, and the Prime program, Amazon customers can't or won't shop elsewhere.

I take serious issue with the Kindle and the way Amazon handles their e-book business, to the point that I do not shop there with money. (I use Swagbucks, which I redeem for gift cards, and I happily use those at Amazon, but I have not spent actual money with them in two years.) Still, I find it fascinating that they have found so many ways to garner enough loyalty to keep millions and millions of customers dedicated to shopping on their website.

Do you shop at Amazon? Are you a Prime member? What do you think of it?


4 comments:

  1. I love my prime account, but I didn't pay for it (milking that grad student ID for all it's worth!). I mostly only shop on Amazon with gift cards, but I do regularly use their site as a jumping-off point when doing price comparisons. If I find Amazon to be the best price for something I've already planned on purchasing, I certainly order it from there regardless of having a gift card.

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  2. I LOVE my prime membership!
    I didn't pay for it. I'm surprised anyone would when you can get it for free lol.

    I don't buy ebooks, I download them for free (don't arrest me) so that part of amazon matters little to me.

    I am obsessed with amazon for shopping for just about anything.

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  3. Can you elaborate a little more on why you don't like the Kindle & Amazon's e-book business?

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  4. I shop at amazon but not to often. I'm not a prime member either as I ship internationally so when I do order it is only to get things that are not available where I live or for a really high savings gain(hard to imagine buying from overseas it is cheaper but it is)

    I also think it is awesome that they make profit from what they do. Good customer service coupled with convenience and you have a recipe for success. I'm not surprised they have loyal customers. It's almost like finding a good friend.

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Thanks for commenting!