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  1. #1
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    [EN] Half of America could have Amazon Prime by the end of the year

    Krystina Gustafson
    Sep 26, 2016

    Amazon's 49 million Prime members are worth $143 billion over their lifetime with the company, Cowen and Company analyst John Blackledge said Monday.

    And with its pace of new subscriptions speeding up, the online behemoth is set to rake in even more money from its members-only program.

    Prime is on track to add 12 million subscribers in 2016, according to Cowen's research. That's up from 10 million new members in 2015 and 7 million in 2014, despite a larger existing customer base.

    All in, Blackledge estimates roughly 44 percent of U.S. households are Prime members. That penetration could accelerate to 50 percent by the end of the year, with the service ultimately having the potential to reach more than 60 million U.S. households, Blackledge said.

    Amazon does not disclose how many people are enrolled in the program. Other analysts have put the subscriber number even higher.

    "Prime has maintained healthy growth largely due to [its] increasing value proposition," Blackledge said.

    That growing value includes an extension of its same-day delivery service, more robust streaming options, and its recently added monthly membership plan. While an annual subscription costs $99 a year, shoppers can now pay $10.99 a month for the service.

    Even if Prime's membership had already peaked, those shoppers would by far be the most lucrative for Amazon, Blackledge said. Prime subscribers purchase items from its site more than three times a month on average, compared with two times a month for nonmembers. They also generate 80 percent higher profit than nonsubscribers, Blackledge estimates.

    According to Cowen's calculations, Prime households spend an average $193 a month on the site. Separate data from Consumer Intelligence Research Partners has found that 91 percent of Prime subscribers renew for a second year. Given that members rarely cancel the service once they've enrolled, Blackledge estimates the lifetime value of these shoppers at roughly $3,000.

    Yet as Prime's existing pool of members grows, the key to its long-term potential is convincing nonsubscribers to pay for its ecosystem, Blackledge said. He estimates 47 percent of non-Prime households bought something from the site last month, making him "confident" it will continue to drive conversions.

    In July, Amazon reported its largest-ever sales day, tied to its second-annual Prime event. That event was designed to celebrate the service's anniversary, as well as encourage additional sign-ups.

    Traditional retailers are beefing up their digital capabilities to better compete with Amazon. They're also promoting their key advantage over the online site: physical stores. Bricks-and-mortar shops make it easier for shoppers to make returns, and pick up items on a tight deadline.

  2. #2
    WHT-BR Top Member
    Data de Ingresso
    Dec 2010

    Amazon's Prime membership is eating into Costco and Sam's Club's territory

    Eugene Kim
    Sep. 26, 2016

    Amazon's paid membership program Prime is rapidly growing its footprint — and it could be doing so at the expense of traditional warehouse club brands like Costco and Sam's Club.

    According to a note published by Cowen & Co. on Monday, the percentage of US households that only pay for Prime membership has more than doubled over the past four years, from 7.1% in 2013 to 16.2% in 2016. In the same time span, housholds that only use either Costco (from 14.9% to 9.8%) and Sam's Club (from 16.9% to 9.7%) dropped noticeably.

    In the meantime, households that pay for both Prime and Costco memberships jumped from 4.8% to 11.3% in the past four years, while the same trend is seen among households subscribing to both Prime and Sam's Club (from 4.8% to 8.5% in 2016).

    Cowen said the numbers indicate either Amazon Prime attracting a higher percentage of Costco and Sam's Club members, or signing up new customers who didn't have any warehouse membership before. And as Amazon continues to add more perks for its Prime members, the trend will likely continue, it said.

    “The risk is that as Amazon continues to improve Prime's value proposition and add more layers to the Prime service, US households could cancel subscriptions for one or both of the Warehouse clubs. At a minimum, the number of consumers opting to just use Costco and/or Sam’s Club 'Only' is likely to continue to decline," Cowen wrote in the note.

    Prime is Amazon's paid membership program that gives access to free shipping and its own video and music streaming services. Amazon has never publicly disclosed the number of Prime members, but analysts believe it's the roughly in the range of 50 million to 70 million in the US.

    Cowen pegs Prime's total membership at 49 million in the US, or 44% of all US households. That's at an all-time high, and nearly triple the penetration rate in 2012 — all the while Costco and Sam's Club's penetration rates have remained largely flat over the past four years.

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