Amazon (AMZN, Financial), the highly regarded online shopping portal, has been making a killing from its recently launched "prime membership program" of last year. In its recently furnished fourth quarter report profits rose after two consecutive quarters of losses squashing analyst expectations of $0.17 a share having recorded earnings of $0.45 a share that was clearly backed by the new initiative which worked wonders after Amazon raised the prime subscription fee to $99 from $79 which saw more height being added to the membership graph. While the subscriptions soared with time, an estimated 10 million new customers signed up over the holiday season alone. As this growth in customer count was an impressive achievement from the company standpoint so let’s dive in to decipher some of the details of this new marketing initiative and how it has created a difference for Amazon which operates in a market where competition from fellow players is intense and requires continuous implementation of new strategies to survive in the existing battlefield.
About the new membership program
Amazon Prime membership always intends to keep its customers on a privileged foot. When you want a last minute gift as you forgot to pick up something for your loved one, Amazon immediately stretches the hand of help. Within two days the product is shipped and it reaches your doorstep- that too for FREE!
Here are a few more benefits that Amazon Prime membership gets you as shared by the company:
- You get unlimited deliveries with no minimum order size that applies to 20 million items.
- All your shopping problems are solved
- They offer delivery services everywhere, home to office and everywhere that falls between.
- Enjoy 30 days free trial.
- Anytime cancellation.
- only $99 a year charge afterwards.
- Free two-day shipping and video streaming.
It did come quite as a surprise for financial analysts that Prime customers did not flee the service when the ecommerce giant raised the membership price, instead they joined in huge numbers improving the membership percentage to 50% in the U.S. and about 55% worldwide.
The impact on Amazon’s growth curve is apparent
After paying the annual fee for the Prime service, the customers laid focus on some serious shopping and thus enjoyed satisfactory results. Figures released recently by the Consumer Intelligence Research Partners suggest that there are about 40 million Amazon Prime members in the United States right now who spend about $1,500 a year over shopping. However, in the course of the whole year, non-prime members have spent about $625 over shopping which is almost half of the amount spent by the prime customers. Hence, the Prime Membership has brought Amazon’s a wide swing in popularity and has thereby been lauded by many as the most successful venture.
Business Insider CEO and Editor-in-Chief Henry Blodget, who also happens to be an Amazon shareholder, was all in praise for Amazon. Amazon’s CEO Jeff Bezos, an investor in Business Insider, states that to see success at your side you just have to connect with a few big ones and Prime membership is one of those for the company. The company is pressing hard to add more perks in Prime membership and has launched a two-hour delivery service called Prime now in some of its operational areas. Additionally, Prime members now are being given the privilege to avail unlimited photo storage on Amazon’s cloud, a new concept introduced by Woody Allen exclusively for the existing or new Prime members.
Final word
As the company continues to try out new marketing initiatives, it’s to be seen whether it is able to generate regular improvement in its revenue stream for the long term. Presently the new prime membership program is riding at its high and Amazon is hoping to see its membership numbers soaring in the upcoming quarters as well. Let’s stay tuned and keep watching!
