Why You Can Trust CNET As Amazon marks 20 years, Prime grows to 44 million members in US
The online retailer's membership program, a key part of its growth strategy, added 3 million more people in the past three months, according to a new survey.
Amazon's 20th anniversary party has a guest list that's an estimated 44 million people long.
Just in time for Amazon's Prime Day sale on Wednesday -- which is how the e-commerce giant is marking its two decades online -- market researcher Consumer Intelligence Research Partners published its quarterly report on the estimated number of Amazon Prime members in the US. According to CIRP, Amazon boosted the membership program's rolls by 3 million people to 44 million during the three-month period that ended June 30.
The researcher added that 47 percent of Amazon's US shoppers are now Prime members, up from 42 percent three months earlier.
"US Amazon Prime membership has grown significantly since we first started measuring it in 2012," Josh Lowitz, CIRP's co-founder, said. "It has more than doubled in a little more than two years."
Amazon offers free, two-day shipping, a streaming-video library and a handful of other benefits as part of the Prime membership program, which continues to increase its rolls despite a price hike last year to $99 annually from $79. Prime has become a central part of the company's growth strategy since it was first introduced 10 years ago, as members tend to spend nearly twice as much on Amazon as non-Prime customers. According to CIRP's latest report, Prime members spend $1,200 annually on Amazon, while other customers spend $700.
Amazon regularly offers a free 30-day membership to Prime, bringing on millions of trial customers during the holiday-shopping season. Prime Day -- which has been likened to Alibaba's own manufactured sales event in China called Singles Day -- should serve as yet another helpful catalyst to get more folks to try out the program. About 70 percent of those trial members end up converting to full members, CIRP reports.
"People love Prime and it continues to grow," an Amazon spokeswoman said in a statement.
CIRP bases its findings on surveys of 500 people in the US who made a purchase at Amazon.com from April through June. Amazon doesn't disclose specific numbers on its Prime members, though has said it has tens of millions of Prime members in both the US and worldwide.
"I would say that it's one of the most significant innovations -- in my opinion -- that they did," said Kirthi Kalyanam, director of the Retail Marketing Institute at Santa Clara University's Leavey School of Business, adding that Prime successfully strips out paying for shipping, the leading consumer burden of online shopping.
However, the expansion of Prime hasn't gone unnoticed by rivals. Walmart is testing out its own free three-day shipping service called ShippingPass, and deep-pocketed startup Jet.com plans to launch later this year with a membership-focused online store. Walmart has been slow to respond to the popularity of Prime because it first needed to build out its e-commerce infrastructure, online selection and scale before it could flip the switch on a rival membership program, Kalyanam said. But, in a sign of its increased aggressiveness online, the retailer unveiled plans to offer a competing sales event on the same day as Prime Day.
And although Amazon nets billions of dollars from Prime membership fees, the company will likely need to keep spending on new services to keep members from leaving, even as Amazon overall still struggles to turn a significant profit.
"When you raise the price to that level," Kalyanam said of Prime's $99 cost, "you need to constantly drive value to justify the cost in different ways."