Research Predicts Half Of All Americans Will Be Amazon Prime Customers By 2020
By Christine Kern, contributing writer
Prime Membership Hit 20 Million In January, Still Growing
E-commerce, particularly in the form of Amazon’s Prime program, is expanding almost faster than we can count it, according to Macquarie research reports. In January, Amazon confirmed to Business Insider that it had gained at least 20 million subscribers to the Prime service, which provides users with free two-day shipping on selected items, as well as access to a streaming video subscription similar to Netflix. And Macquire research now estimates, based on past growth, that Amazon Prime will capture half of the U.S. population as members by the year 2020.
Although currently, some 90 percent of Amazon’s products are not eligible for Prime, Amazon seems to be priming the pump for the shift to Prime membership. Recently, the online ecommerce giant raised its non-Prime free-shipping minimum to $35 from $25, making the $99 annual membership comparatively more attractive to value-conscious consumers. Last year, a Morningstar/Consumer Intelligence Research Partners LLC report estimated that the average Prime member spends $600 more each year, including the fee, than the average Amazon customer outside Prime.
According to Business Insider, Macquarie’s growth estimate for Amazon Prime is on the fact that Amazon said that Prime memberships increased 53 percent in 2014 and currently holds a base of at least 20 million members (which Macquarie translates to approximately 20-25 percent of US households right now), and the firm projects that Amazon Prime membership will continue to see a 12% compound annual growth rate.
A 2014 study by RBC Capital Markets demonstrated that Prime members spend nearly twice as much on Amazon products as non-Prime members spend, which helps Amazon cover the costs of the Prime service. Another, more recent study by Consumer Intelligence Research Partners, ( CIRP), found that Prime members spend more than double what non-members do, meaning that if Amazon could truly entice 50 percent of Americans to become Prime members, the result would be skyrocketing revenue. The CIRP study actually estimated that there were approximately 40 million Prime Members, or roughly 45 percent of all Amazon customers, in the United States as of December 31, 2014.
Interestingly, the CIRP study also found that “Similar to Amazon Prime members, Amazon Kindle owners are better customers. They also shop more frequently, and also buy more expensive items on average.”
As Business Insider reported, Amazon has spent considerable resources to upgrade its digital offerings for Amazon Prime adding more than $100 million worth in exclusive original video content, in an effort to encourage new members.
Whatever the numbers, it is obvious that Amazon, via Amazon Prime, is set to experience unprecedented growth. As consumers shift to more mobile purchasing, beyond just showrooming, retailers like Amazon are going to benefit. And it is Prime’s added benefits – like streaming and unlimited cloud storage in addition to free shipping – that are making the difference for consumers.