Amazon’s Prime membership program now counts 80 million members in the US, up from 58 million at the end of Q1 2016, according to new estimates from Consumer Intelligence Research Partners (CIRP).
Prime’s growth has helped fuel the company’s rapid success in recent years, turning it into a dominant force in the US e-commerce sector with a 43% market share.
Unsurprisingly, the study found, Prime members tend to spend more with Amazon than non-Prime members. Prime members spend $1,300 per year with the e-commerce giant, on average, compared with $700 for non-Prime members. This increased spend helps Amazon offset some of its costs associated with free shipping and other Prime perks.
Prime’s growth has been mostly concentrated in the US, where the total number of Prime members grew 38% year-over-year (YoY) in Q1 2017, according to CIRP. That means 60% of Amazon’s US customers now have Prime memberships. Prime’s rapid adoption in the US has been a transformative force in the retail market, driving up Amazon’s revenue and market share, while department stores and big box retailers suffer declining sales and foot traffic.
However, Prime has seen slow adoption in other countries, making Amazon’s retail business very reliant on its home market. Prime is available in a number of markets around the world, including Canada, India, Japan, the UK, and Germany — yet all of these combined only account for a fraction of Prime subscribers. The company has tried to use Prime to gain more market share and revenue in these countries, but the US still accounts for two-thirds of its retail sales. Amazon needs to drive Prime adoption to diversify its revenue outside of the US, and will likely need to experiment with new perks and services to attract Prime members in international markets.
E-commerce has been on the rise in the last several years, thanks in large part to titans in the industry such as Amazon and Alibaba. E-commerce will truly become the future of retail, as nearly all of the growth in the retail sector now takes place in the digital space.
BI Intelligence, Business Insider's premium research service, forecasts that U.S. consumers will spend $385 billion online in 2016. Moreover, BI Intelligence predicts that number will grow to $632 billion in 2020.
This is hardly surprising considering e-commerce's healthy growth. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce.
The number of online shoppers has grown by nearly 20 million from 2015 to 2016. And these 224 million shoppers are spending more, as the total amount spent online grew from $61 billion in the first quarter of 2015 to $68 billion in Q1 2016. Finally, these customers are transacting more frequently, as the number of online transactions has risen by 115 million from 2015 to 2016.
But all of this shopping online creates its own set of challenges, both for consumers and the companies that are trying to get their products onto shoppers' screens and into their shopping carts. In short, you need a plan.
And to create your ultimate e-commerce battle plan, you need the right intel.
BI Intelligence is here to help.
Our team of industry experts has you covered on topics such as:
Shopping cart abandonment
Social media monetization
Accommodating shoppers at the 11th hour
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