Amazon Prime Member Shopping Power Persists

Amazon Prime was launched as a free 2-day delivery program for Amazon shoppers. Over the years, Amazon has added a wide array of other benefits for Prime members, including Prime Video, Prime Music, and photo storage. Amazon also continues to improve other attributes and sped up the delivery times even further for many purchases. At the same time, the rest of the online retail world learned from Amazon’s success with “free” fast shipping, and has strived to approach the standard Amazon sets. In addition, in physical retailing, we see a return to in-person shopping after the pandemic pushed a lot of shopping online.

Despite increased retail competition online and in-person, Amazon Prime members continue to be outstanding Amazon shoppers. Amazon has either trained Amazon Prime members to be superior Amazon customers or designed a program that attracted shoppers with a predisposition to spend more at Amazon. We believe both are true. In any event, US Amazon Prime members continue to spend about twice as much as non-members. 

Prime member spending is driven by shopping frequency, not average order size. In fact, the average transaction for Prime and non-Prime members is almost identical. With approximately double the number of Amazon orders per year, Prime members spent about $1,200 per year, compared to about $600 per year for non-prime customers (Chart 1).