Faster Shipping Makes Better Customers
We’ve seen before how Amazon Prime membership creates an expectation of ubiquitous fast, free (included) shipping. A couple of weeks ago we looked at Amazon’s rural opportunity and how improved shopping speeds could increase Amazon Prime membership penetration in non-urban and non-suburban markets. That made us ask the question, how does Amazon shipping speed correlate with Amazon shopping habits overall.
How is Amazon rewarded for offering increasingly aggressive delivery speed? As it turns out, customers that enjoy the fastest shipping spend more at Amazon.com.
The average US Amazon customer spends approximately $1,000 per year. Prime members spend more than shoppers without Prime. Amazon credit card holders spend more than those without a branded card. Subscribe & Save customers spend more than average Amazon shoppers. Each of those Amazon affiliations are affirmative decisions that the customer makes. Shipping speed is more driven by Amazon. While customers can choose their shipping speed, it is limited by what Amazon offers for their purchase in their market.
We sorted Amazon customers by the shipping speed of their most recent order. Customers who enjoyed same-day or one-day shipping in their most recent order spend almost $1,300 per year, and annual spending declined steadily as shipping times lengthened (Chart 1).