What We Can Expect from Amazon in 2Q17

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Part 5
What We Can Expect from Amazon in 2Q17 PART 5 OF 14

Data Backs Amazon Adding More Perks to Prime

Most shoppers are influenced by shipping fees

The Prime program may be keeping Jeff Bezos awake at night these days. Not because Prime is causing Amazon (AMZN) problems, but because the future of the company is becoming increasingly tied to it.

The findings of the recent survey published by United Parcel Service (UPS), together with other independent studies, suggest that Amazon would want to continue to support its Prime program. The UPS survey showed that shipping fees are a major consumer influence. Of the ~5,000 shoppers surveyed, 79.0% listed shipping fees as the top factor they consider when searching and selecting products online. That figure was only second to product price, which was the key influence for 81% of respondents.

Data Backs Amazon Adding More Perks to Prime

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Amazon takes care of shipping for Prime shoppers

If shipping is such a strong influence on how consumers shop online, then Prime has a role to play in bolstering Amazon’s profile as the destination for online shoppers.

The Prime program is Amazon’s way of removing shipping concerns for its shoppers. For a standard subscription, Prime members pay $100 a year, and that allows them to enjoy free shipping on millions of items on Amazon.com. As part of the efforts to draw more shoppers to Prime membership, Amazon has introduced a monthly Prime subscription and rolled out discounted Prime packages for students and people on government assistance.

There is an incentive for Amazon to make Prime shine

The consumer interest in low-cost or free shipping, as highlighted by the survey, could embolden Amazon to add even more perks to Prime to make it more attractive. Prime is vital to Amazon as it fends off competition from the likes of eBay (EBAY), Wal-Mart (WMT), and Target (TGT). According to research company Consumer Intelligence Research Partners, there are more than 80 million Prime subscribers in the United States (SPY), as shown in the above chart.


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