Those who sign up for the retailer's free-shipping Prime program spend an average of $1,500 per year buying stuff on Amazon, according to a new report from Chicago-based market research firm Consumer Intelligence Research Partners.
Amazon customers who aren't Prime members spend an average of $625 per year, CIRP found. Prime is creating loyal Amazon customers that increasingly look to Amazon before they go anywhere else. People aren't even going to the retail outlets. They're starting at Amazon. The researchers estimated that 40 million people in the U.S. have Prime memberships. Netflix, by comparison, said last week that it has 39 million subscribers in the U.S.
Amazon doesn't release Prime membership figures, but the company said the day after Christmas that "more than 10 million new members worldwide tried Prime for the first time" during the holiday season.
If CIRP's study is on target, it's no wonder that Amazon continues to pump so much money into Prime. The Prime program, which began in 2005, is now much more than free shipping. Among other perks, Prime members receive access to a catalog of streaming music, unlimited photo storage, and exclusive access to and discounts on some products. And the membership program appears to have no end in sight, and margins are more profitable since ever, since Amazon raised the price of membership last year by 25 percent, from $79. So even if Amazon loses a few dollars here and there from shipping, overall, they will make their money in the long run from the increased spending of its members.
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