Amazon’s secret weapon (no, it’s not drones)

Amazon Prime Spending

A new report from market research firm Consumer Intelligence Research Partners reveals Amazon’s not-so-secret secret weapon. The weapon itself — Amazon Prime — is hardly a secret, of course, but CIRP’s new study has seemingly uncovered just how big Prime is for Amazon’s business. According to CIRP’s study, which surveyed 300 Amazon Prime subscribers who made purchases over a three-month period ending in November, Prime account holders shop on Amazon twice as often as non-Prime Amazon customers. More importantly, they spend more than twice as much — CIRP found that Prime customers spend an average of $1,340 per year with Amazon while non-Prime shoppers spend $650 annually.

This means that Amazon Prime customers are almost as valuable to Amazon as Amazon Visa cardholders, who spend an estimated $1,530 annually on Amazon.com.

“Retailers compete fiercely to get their branded credit cards in customers’ hands,” CIRP co-founder Josh Lowitz said. “Amazon plays this game well, successfully offering an Amazon Visa credit card. Yet, Amazon has a secret weapon in Amazon Prime – these customers are almost as productive for Amazon. Even better, Amazon gains this loyalty, and productivity, without needing to displace another credit card in a consumer’s wallet.”

cirp-amazon-prime-2013

Lowitz’s partner and fellow CIRP co-founder Mike Levin added that according to the firm’s estimates, Amazon currently has about 16.7 million Prime members. The firm also calculated that there were 7.3 million Amazon Visa cardholders in the U.S. as of the end of September.

“It appears that the Amazon Prime program has grown somewhat faster than the Amazon Visa program,” Levin noted. “Amazon began offering its branded Visa card in 2002, and started Amazon Prime in 2005. In three fewer years, Amazon Prime has grown to twice the size of the Amazon Visa program.”

blog comments powered by Disqus