May 14, 2009How big is Amazon Prime?
One of the most frequently asked questions we get at ChannelAdvisor from both retailers and Wall St. analysts is: “How many buyers do you think are in Amazon Prime?” Well as a card carying member of Prime, I can’t imagine why anyone that buys at least one thing a month online wouldn’t have it. But it is a unique program that I’ve found many consumers don’t really understand. Given that I typically guess that about 2-5% of Amazon’s 91b active buyers. Thus I guesstimate that there are 1.6-4m buyers in the program. Of course, you’d expect these to be the power-buyers and Prime super-charges that so they probably represent a larger share of Amazon’s GMV (Gross Merchandise Value – The sum of Amazon’s retail and seller business’ sales).
- Gene’s team did an analysis and a survey and discovered:
- By PJC’s estimates there are 2m Prime members and they are growing at a 24% y/y rate
- The survey of prime members reveals that new prime members’ gmv goes from $400/yr to $900/yr in their first year of prime (WOW!)
- Thus every 1m prime members adds 1.5% to Amazon’s revenues by PJC’s calculations
- Prime members spend 130% more than the non-prime Amazon buyer
- 92% of Prime members surveyed plan to renew
Gene included this chart that illustrates the incremental lift that Amazon receives with each chunk of adoption:
- At 2m users out of 91m that’s 2%
- But if they spend 130% they are essentially the same ‘size’ as 5m buyers or 4%.
It’s important to note that FBA not only gives you Prime member benefits, but also SuperSaver and the ‘fulfilled by Amazon’ tag that increases buyer trust.