Amazon.com Inc.’s Prime membership program has at least 30 million items eligible for free two-day shipping, up 11% from 27 million in the second quarter, according to investment firm Robert W. Baird and Co.
The analysis provides the latest snapshot of the e-retailer’s $99-per-year Prime shipping program, introduced nine years ago, and whose price increased from $79 annually earlier this year. Amazon will not detail the number of Prime members beyond saying “tens of millions” of online shoppers belong to the program. Colin Sebastian, a longtime Amazon observer and e-commerce analyst who works for Robert W. Baird and Co., estimates that Prime has 25 million paid members, though perhaps as many as 50 million users, given that households can share accounts. Amazon also gives away limited-time free Prime memberships.
In this week’s Baird research note, Sebastian and colleague Benjamin Gaither write that Amazon has made 14% of physical goods eligible for Prime shipping. That includes 25% of media products, such as books and DVDs, and 9% of non-media products, such as consumer electronics and apparel. The rate suggests “a meaningful opportunity to further Prime expansion,” the note states.
Amazon in recent months has tried to reduce its expense for operating Prime by incenting online shoppers to select standard shipping rather than the two-day delivery Prime promises. The e-retailer also launched a referral program anchored by Amazon shopping credits and offered more free streamed music to Prime members to go along with the streamed video content they already receive. At the same time, Amazon, which continues to increase investment in its warehouse network—it posted a 29.3% year-over-year fulfillment spending increase in Q2, to $2.38 billion—is expanding its same-day delivery options. For instance, Amazon.com Inc. recently expanded its same-day “Get it Today” delivery tool to Baltimore, Dallas, Indianapolis, New York, Philadelphia and Washington, D.C. The e-retailer now offers delivery the same day to metropolitan areas that represent 17% of the U.S. population.
Amazon is scheduled to report its Q3 earnings on Thursday.
The Baird report also says that grocery and gourmet foods represents the fastest-growing product category by total SKUs in the third quarter, with a 140% quarter-over-quarter increase in SKUs, a boost driven in part by seasonal consumer demand.Favorite