Amazon to slash Amazon Prime fees?

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An article in Wired magazine raises an interesting question: could Amazon be on the verge of slashing the cost of Amazon Prime?

Amazon Prime is a premium subscription product from the online retail giant whereby you get expedited free and fast shipping in return for an annual subscription ($79 in the Us, £49 in the UK). In the US, Prime also gets you free access to a Netflix-like video streaming service and the Kindle lending library.

In the past Amazon has been cagey about the success or otherwise of Prime and the speculation has always been that it probably worked very well for an admittedly small cohort of buyers.

However, the Wired article reveals some research by Consumer Intelligence Research Partners (CIRP) shows some startling numbers that make Prime a central plank of Amazon’s success. (These numbers are US numbers, remember.)

By the end of 2012, Amazon had 10 million Prime customers out of a total customer base of 182 million: about 4% of the total.

Over the course of the year, on average, Prime members spent more than twice ($1,224) as much as non-Prime customers ($505). Adding sales to subs, Prime users plough $800m of revenues into the Amazon coffers.

With that in mind, argues the article, the cost of Prime could well benefit from being lower to lure in more dedicated online shoppers seeking to get their money’s worth. Anyway, it’s worth a read.

5 Responses

  1. I think it would be a good move if they did bring the price down. When doing price comparisons I take the postage into account (obviously) and a cheaper membership might encourage me to take it and then buy more from Amazon.

  2. Anything that increases sales is a Good Move.

    Since Delivery cost is the main factor for making shopping online, Amazon prime works sweet.

    FREE delivery is something very hard to replicate by small retailers however, Amazon Prime gives good insight where everyone should go.

    Thanks for bringing this up Dan!

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