Is It Prime Time For Your Business?

With Amazon announcing a familiar surge in revenue and, less familiar, a surge in profits, the company has credited the Amazon Prime loyalty program as a key driver of the positive results. More retailers in recent years are seeking to emulate the success of Amazon Prime, launching similar programs with express shipping and other benefits included in an annual service fee.

Amazon Prime is regarded as the benchmark of online retail loyalty programs, currently offering a range of benefits including free two day shipping, same day delivery for certain metro areas, plus video streaming, music and exclusive member offers for US$99 per annum. According to Amazon’s latest market report, Prime members now number 46 million and counting, growing more than 50% each year. That’s US$4.5 billion a year in revenue just from the Prime membership fees, let alone the flow-on in increased customer value with more repeat purchases and greater marketing opportunities.

In 2013, ASOS launched ASOS Premier, currently offering free express shipping and free returns for Australian customers for $39 per month. In the US, a number of retailers have moved to adopt a Prime-esque membership model, the latest being fashion retailer Land’s End, with has re-introduced its Canvas brand along with a $50 per month ‘Circle Membership’ offering free shipping and returns plus 20 percent off full price purchases and other perks.

ASOS Premier

Locally, Catch of the Day has quietly launched Club Catch in 2015 to create a similar offering to Amazon Prime for $69 per year, with free standard shipping (on orders above $50) and exclusive offers for Catch Club members.

Prime Time?

Is it time for your business to consider a Prime-style service? The business case is highly compelling. In 2015, Millward Brown Digital conducted analysis of the buying patterns of more than two million online shoppers, which found that 63% of Amazon Prime members converted to purchases during a shopping session, versus only 13% of non-Prime members. It also showed that Prime members were a lot less likely to research prices online compared with non-Prime members.

Since it launched, questions have been raised about Prime’s sustainability in light of the cost of fulfilment associated with the program. Amazon’s latest results would indicate the e-commerce giant is conquering that challenge. Consumers are clearly ready to embrace a loyalty model that offers a combination of free shipping and benefits, and are more likely to convert, less likely to flirt once aboard the Prime train. Could this be a catalyst for a spate of Prime-type launches across Australia?

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