While Amazon has never revealed just how many customers subscribe to the Amazon Prime service, one new study leads an analyst to believe it could be around 10 million.
If you’ve wondered why Amazon is heaping so much love on to Amazon Prime customers as of late, it may all be in the numbers. Morningstar analyst R.J. Hottovy went over a survey of Amazon shoppers that was conducted in Nov. 2012 by Consumer Intelligence Research Partners and discovered some very interesting fact he announced in a note to investors.
The average Amazon customer spends $505 a year with the company, but the average Amazon Prime subscriber spends $1,224 a year. It seems that the $79 a year subscription fee – which allows them to take advantage of unlimited two-day shipping, free streaming video and books – leads to people spending even more money with the company.
Hottovy believes that the total number of active customers with Amazon is around 182 million, and that only 4 percent, or about 10 million, of them are Amazon Prime subscribers. However, that small percentage accounts for around 10 percent of the companies revenue. He went on to say that thanks to free trials and connecting Prime to the Kindle Fire line of devices, the number only seems to be growing. By 2017 he is projecting that Prime membership will approach 25 million and account for anywhere from $3.2 billion to $9.6 billion in operating profits for the company.
None of this comes as a surprise to be honest, and the TechnoBuffalo staff has long viewed the low cost of the Kindle Fire tablets to be an enticement to get more people to enter into the company’s ecosystem. It appears that the strategy is indeed paying off. And the news this morning of a price drop on the Kindle Fire HD 8.9 tablets sure makes it look as though the company is about to entice more people into the system.