The E-commerce industry is very grueling, not only the competition comes from Brick and mortar stores but also from established rivals and a new wave of star ups lush with venture capitalist funds and then there are class action law suits, piracy rising ware house costs and advancements in logistics. The biggest and the best in the business have taken a hit but against all this odds Amazon is some how managing to turn against the tide and is beating all the odds and market expectations, it has just pulled off its biggest quarterly profit in company history — for the second quarter in a row and is on the longest profitability streak in four years. And it’s doing so in some style as its core retail business in North America is still growing more than twice as fast as the entire U.S. e-commerce industry. The Writing on the wall for its rivals is clear for it is eating up a ton of market share and increasingly looking pretty much unstoppable.
This pretty much begs the question as to what is Amazon doing that makes it different from all its rivals. The answer to this lies in a service which asks the consumers to pay up annually for a privilege called shopping. Yes millions of people pay an annual subscription fees of $99 dollars to avail the Amazon Service of Prime. Prime which started as a yearly fee for free two-day shipping now offers a sometimes bewildering array of perks, including household product subscriptions, one and two hour Prime Now delivery, streaming music and video, e-books, groceries (for an additional $200 a year), photo storage and more. As the billionaire Jeff Bezoz, Co- founder and CEO of Amazon puts it “Prime has become an all-you-can-eat, physical-digital hybrid”. Its the one stop shop for all you needs with services so elaborate that you are compelled into paying up a premium of $99 dollars a year to avail it.
Prime has as per reports 47 million members and the base is rising as Amazon is expanding into other markets and offering prime subscriptions on monthly basis to attract new customers. The reason why Prime is Amazon Go-To strategy is that prime Users spend more than an average user and are less likely to switch to other portals for a price difference.
To put it into perspective not only are prime subscribers paying up front for subscription they are also spending and buying more filling up Amazon coffers as it uses its war chest to further gain into newer markets and consolidate and expand in US at the expense of its rivals.