Amazon.com Inc. has 126 million members in its Prime loyalty program in the United States as of September, according to a new estimate from Consumer Intelligence Research Partners (CIRP). Prime members account for roughly 65% of Amazon shoppers in the most recent quarter, according to CIRP.
CIRP based its findings on a survey of 500 U.S. consumers who made a purchase on Amazon.com between July and September.
Amazon does not disclose how many Prime members it has by country; however, in January, it said it had more than 150 million Prime members globally.
“After several quarters of slower growth, Prime memberships picked up in the most recent quarter,” says Josh Lowitz, partner and co-founder of CIRP. “COVID-19 likely drove much of this growth, with customers needing to order more items, more frequently as they work and study from home. The annual growth rate in the base of members was the highest in four years.”
Prime membership is important to Amazon for several reasons. The retailer’s subscription revenue, largely made up of Prime membership fees, totaled $19.21 billion in 2019, a 35.2% jump year over year. Subscription revenue accounted for 6.8% of the company’s revenue, up from 6.1% in 2018 and 5.5% in 2017.
Even more important, once a consumer signs up for Prime, she is unlikely to cancel her membership. For example, 64% of consumers who sign up for a trial membership convert to a paid membership, according to CIRP, and 93% of consumers continue to pay for the program after one year, while 98% stay signed up after they’ve been Prime members for two years.
Prime is the top reason consumers shop on Amazon, according to a Digital Commerce 360 and Bizrate Insights survey of 1,000 U.S. online shoppers in June. When asked to list up to five reasons why they shop on Amazon, 51% of consumers cited “I’m a Prime member and receive free shipping on most items.” The second-most popular reason, at 46%, was the ability to find products quickly.
What’s more, many Prime members are happy with the loyalty program. At least 70% of consumers who subscribed to Prime for a year or more were very or extremely satisfied with their experience on Amazon, and two-thirds or more spend more on Amazon now than when they first signed up for Prime, according to an RBC Capital Markets survey of 2,800 consumers in June.
Additionally, over half of Prime members are so sold on Prime they would stick with it even if Amazon raises the price again. (Amazon raised the price to $119 from $99 in 2018). When RBC asked consumers if they would cancel their Prime membership if Amazon raised the price to $139, 54% said no and 46% said yes.
When Prime debuted in February 2005, there was nothing else like it: Shoppers could pay the service’s $79 annual fee to receive two-day delivery on Prime products for a year, rather than the $9.48 it charged to deliver a single book within a couple of days. The idea was that convincing consumers to prepay for “free” and fast shipping, would encourage them to repeatedly return to Amazon to ensure they got their money’s worth.
About a year after Prime’s introduction, the retailer was already touting Prime’s benefits. “We’ve seen increased purchases by Amazon Prime customers across more categories, with especially heavy purchases in electronics, kitchen, and health and personal care,” said Thomas J. Szkutak, former senior vice president and chief financial officer for Amazon, during the retailer’s 2005 fourth-quarter earnings call in February 2006. In the same call, he said Amazon customers had saved more than $475 million in shipping costs by using Prime.
Over the years, Prime has added more perks beyond free and fast shipping, such as streaming TV shows, movies and music, exclusive discounts at Whole Foods stores, Prime Now two-hour delivery and Amazon Photos. And Prime members are using the additional benefits.
In the June 2020 Digital Commerce 360 and Bizrate Insights survey, 61% of shoppers said they signed up for Prime and other Prime services, such as unlimited music streaming, 16% made a purchase on Prime Day 2019 and had planned to make a purchase on Prime Day 2020, and 11% used their Prime benefits at Amazon-owned grocery chain Whole Foods.
Prime’s promise of fast delivery has helped establish Amazon as an alternative to the physical store. This was even more evident during the start of the coronavirus pandemic in the U.S., when many shoppers turned to Amazon for essentials. 43% of consumers say Amazon is a more important resource to them because of the pandemic, 19% say they can rely on Amazon for next-day delivery, and 6% on same-day delivery, according to the Digital Commerce 360 and Bizrate Insights June survey.
Amazon is No. 1 in the 2020 Digital Commerce 360 Top 1000.