Amazon Continues to Push Loyalty Through Prime

By Grant Arnott | 15 Nov 2011

In a relentless quest to dominate online customer loyalty, Amazon is pouring more benefits into its Prime program, extending the membership benefits beyond fast shipping with an e-book library.

Launched in 2005, Amazon Prime is Amazon’s successful premium membership program entitling members who pay the annual $79 fee to fast, free shipping with no minimum order value. Lately, Amazon has continued to expand the offer to boost loyalty and ward off competition, adding a video and e-book library to the list of Prime member benefits.

Earlier this year Amazon opened up access to its Instant Video library allowing Prime members to stream video for its expanding range of movies and TV shows, currently around at 13000 titles. Last week, the world’s biggest online retailer announced that Amazon Prime Kindle owners could borrow one book per month from the new Kindle Lending Library, launching with 5000 titles. Customers can keep the book as long as they don;t borrow another – to borrow a new book, they have to electronically ‘return’ the other.

How does this help publishers and authors? According to Amazon, it has reached agreements with publishers to include titles in its lending library for a fixed fee. In some cases, Amazon says, the e-retailer is buying the title each time a Prime member borrows it under standard wholesale terms. Amazon says it will demonstrate to publishers that they can ultimately grow sales through the free lending service, as Amazon has with movie and TV studios with Instant Video.

It will be a costly exercise for the online retail giant, but one considered necessary in its bid to ‘outloyal’ rivals such as Apple’s iTunes and Wal-Mart’s new digital subscription offerings. According to the Wall Street Journal, Amazon is prepared to lose hundreds of millions of dollars a year on the program in order to increase market share and loyalty. In 2010, Amazon recorded sales of $34.2 billion worldwide, and its US sales of $18.7 billion accounted for a staggering 11.3% of all US e-commerce sales.

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