Amazon’s (AMZN) Prime service is one of the Internet’s hidden gems. For $79 a year, the company offers Prime members free two-day shipping and access to thousands of streaming TV shows and movies. For frequent online shoppers, Prime is a no-brainer. While Amazon has never disclosed how many people have signed up for Prime, recent estimates suggest the service is quite successful.
Morningstar analyst R.J. Hottovy claims the service is used by more than 10 million members and could contribute roughly a third of Amazon’s operating income, Business Insider reported. A survey of Amazon shoppers revealed that Prime members account for only 4% of Amazon’s 182 million active customers, however they account for nearly 10% of all purchases and spend twice as much as non-Prime customers.
The analyst found that after licensing and shipping fees, Amazon made about $78 per Prime member in 2012. Hottovy estimates that the service could grow to 25 million users by 2017 and contribute for between $3.2 billion to $9.6 billion in incremental operating profits.
