A financial analyst in the United States has predicted that there will be huge growth in the number of Amazon Prime subscribers. In a note to investors, Citigroup predicts that Prime subscribers will reach 275 million within 10 years, up from 101 million at the end of 2017. Mark May also predicts that there will be $500 billion in Prime-related sales per year in that time too.
We remain positive on Amazon shares and view Amazon’s large and growing global Prime member base as not only a source of recurring revenue but a key reason why brands and third-party sellers are increasingly relying on Amazon’s marketplace
Prime has been a tremendous success. Prime members are growing 35 percent to 40 percent per annum. There are many benefits of having highly satisfied membership-based customers, but a simple metric is that most studies suggest Prime members spend twice as much as non-Prime members.
– Mark May, Citigroup
His predictions are based on his belief that 80% American households will use Prime and that there is evidence that there is scope for significant international expansion because Amazon Prime is currently only available in 16 countries. Outside of the USA Prime users are only spending $35 to $40 per month compared to the $120 per month spent by US Prime members.
All of this has prompted Citigroup to increase its prediction for the Amazon stock price which had already exceeded many exceptions this year and saw Amazon briefly valued at $1tn in recent weeks, making it only the second such company in the world with that price tag.
This information should be useful reminder for Amazon merchants of the huge importance of Prime to the Amazon experience and it could still represent a sales growth opportunity, even if you have previously dismissed the various ways that you can plug in. The prospect of 275 million loyal and high spending Prime members will represent a massive Amazon customer base.