Annual Prime membership fee raised by $20
For about two-thirds of the second quarter, Amazon (AMZN) sold its Prime membership subscriptions at a higher price than at the beginning of the quarter.
Amazon announced in April that it was raising its Prime membership fee to $119 per year from $99. The changes took effect on May 11 for new subscribers and on June 16 for renewing subscribers. We’ll see how the hike in the Prime membership annual plan could impact its Subscription Services segment in the second quarter.
Prime monthly plan hiked at the start of the year
The Prime membership program is a component of Amazon’s subscription services business. This segment’s revenues jumped 60% YoY (year-over-year) to $3.1 billion in the first quarter. That was the fastest revenue increase in the business since at least the fourth quarter of 2016, and it happened after Amazon had hiked its Prime membership price for monthly subscribers in January. Amazon raised its Prime membership monthly fee to $12.99 from $10.99.
Walmart grew digital sales by 33%
In addition to its Prime program being a direct source of revenues for Amazon due to its subscription fees, the company uses its Prime membership to nurture customer loyalty. As a result, the Prime program helps Amazon power growth in its retail business as well as defend against competition from retail rivals such as Walmart (WMT) and Target (TGT). Amazon’s retail sales jumped 42.1% YoY in the first quarter, while Walmart and Target grew their online retail sales by 33.0% and 28.0% YoY, respectively, in the comparable period.