Amazon’s Rural Opportunity

Last week the Wall Street Journal had an insightful article about how Amazon is working to speed up shipping to its rural customers, with some perspective from CIRP. It showed how the vaunted Amazon logistics system is ready to expand beyond dense city and suburban regions to harder-to-serve areas of the US. We said, “As Amazon has gotten better at delivery, it has become economically practical to do it in more places.” Rural America is an underserved frontier for Amazon, and they are moving in. 

We’ve shown previously that Amazon customers join Prime mostly for shipping benefits. Sure, many enjoy the streaming video service, and some listen to streaming music, but most of the other benefits don’t matter nearly as much as fast, free shipping.

We expect Amazon customers in rural areas want faster shipping as much as those in urban and suburban areas. So, we think faster shipping in rural areas can attract new customers and deepen the shopping habits of existing customers.

We ask survey subjects to identify which type of area they live in. About one-half identify as suburban, with one-quarter each identifying as urban or rural. Prime membership is a little lower among rural shoppers. 71% of rural customers have a Prime membership, less than the 78% of urban customers and 76% of suburban ones (Chart 1).