Wednesday, August 29, 2012

The Power Of The Amazon Prime 'Club'

In 2002 Amazon launched its Free Super Saver Shipping program Amazon offering free shipping on orders over $25. In 2005 Amazon launched Amazon Prime, which for an annual fee of $79 gave its’members’ free two day shipping on all you can eat. Initially, many may have questioned the value of the service but Amazon has continued to add value its its club and now has built a very substantial membership which obviously keeps coming back to Amazon for more.
Amazon Prime now offers over 15 million items that are eligible for the service, Prime Instant Video, which is free to members offering over 22,000 films and tv programmes on demand and adding the Kindle Owners’ Lending Library, which has now grown from some 5,000 books to over 180,000 that can be borrowed for free with no due dates. Prime remains just $79.
Amazon now has announce that it ships more items with Prime Free Two-Day Shipping than with Free Super Saver Shipping and they have built a club and member loyalty which will become increasingly self fuelling. Amazon Prime is a marketing work of genius that its competitors will struggle to compete with. They may offer free shipping but in doing so stand to the total cost, they may offer free on demand film downloads but only have a film service and not a media service. They may only offer digital and have a limited range compared to Amazon’s.  more and – the program Amazon launched in 2002 that offers free shipping on orders over $25.
Amazon is building a significant ‘club’ and differentiator which not only is hard for others to follow but potentially protects Amazon from sudden attack by building a ‘first choice’ or preferred port for its customers. Importantly they can now build new services which can be offered to Prime members and the Kindle lending is a clear example of this. Effectively what started out as a postal offer has morphed into a subscription club, on line library for film and ebooks and could be easily plugged into other services.
As others improve their offer Amazon may well loose some share in individual markets but they are growing a bigger market share across several markets. This in turn will become more appealing to many and offer value and a one stop shop.  
Amazon has displayed and continues to deliver first class value and customer service and it is these qualities that others such as Barnes and Noble, Kobo and Apple must grapple with

No comments: