Members of the Amazon.com Inc. Prime loyalty program are indeed very loyal to Amazon, as new research suggests those consumers convert on Amazon.com at a rate that’s 22 times higher than the average conversion rate of the largest online merchants in North America ranked in the Internet Retailer Top 500 Guide.
Amazon’s conversion rate among Prime members is 74%, according to a study from website traffic measurement firm Millward Brown Digital on the online shopping behavior of Prime members, up nearly 10 percentage points from 63% in early April. When Prime members shop with other online retailers, such as Wal-Mart Stores Inc., Target Inc. and Home Depot Inc., they convert on average 6% of the time, the study suggests.
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In comparison, the average conversion rate for Top 500 merchants is 3.32%. Consumers who are not members of Prime convert at a rate of 13% on Amazon.com, the company says, still nearly four times as high as the Top 500 average.
Amazon Prime gives members free two-day shipping on 20 million items for $99 a year and includes other services such as free streaming video and e-books.
Even worse news for online retailers not named Amazon: Once a consumer becomes a Prime member, she is a lot less likely to consider purchasing from any other e-retailer. For example, if someone who is not a Prime member begins a shopping session on Amazon.com, 12% of the time that consumer will also browse on Walmart.com during the same session, the study finds. But a Prime member will only browse on Walmart.com 0.9% of the time.
Those numbers drop even further for other retailers, the study shows, as 8% of the time non-Prime members will also consider Target.com, versus 0.7% for Prime members.
Millward Brown Digital based its findings on an analysis of online shopping, browsing and other behavior from its two million-member consumer panel. In this case, Millward Brown identified Amazon Prime members as those who interacted with Prime content, managed their account or engaged in Prime features. This group was then used to look at cross-shopping activities, such as shopping on other retailer sites like Target.com.
An estimate earlier this year from investment firm Macquarie says half of U.S. households could be members of Amazon Prime by 2020. Macquarie estimates 20 to 25% of U.S. households, or 40 million, include a Prime member. Macquarie also says in the fourth quarter of 2014 that 10 million consumers signed up for Prime.
Wal-Mart Stores Inc. plans to test an Amazon Prime-like loyalty program that will offer online customers unlimited free shipping for $50 a year.
Amazon, No. 1 in the Top 500, did not respond to a request for comment on the figures.