Amazon Prime, a subscription membership program in which people pay $99 annually in exchange for a bevy of benefits, is helping Amazon carve-out a huge share of the global e-commerce market.
  • We estimate that Amazon Prime will have nearly 58 million members worldwide by year-end. That would mean that Amazon would have on-boarded about 38 million customers to Prime since the end of 2013 and that Prime members will account for about 22% of active Amazon accounts by the end of this year.
  • Prime is essentially an up-sell program making it a significant growth driver in Amazon's e-commerce business. Because one of the benefits of Prime is free two-day shipping for members, Prime-members end up going to Amazon for a greater share of their shopping needs than non-Prime customers. In fact, 40% of Prime members have spent more than $200 on Amazon purchases in the past 90 days, compared to 13% of non-Prime customers, according to RBC.
  • Prime isn't just for Amazon's most loyal customers anymore. As Amazon bundles more services into Prime, such as music and movie streaming, it will attract even more people to the program, including those who have never made a purchase from Amazon before.
As commerce companies roll-out more services, from shopping and logistics, to payments and loyalty, programs like Prime will likely become more commonplace. For example, Uber could emulate the Prime model by charging its customers a flat fee in exchange for a certain number of black car rides, meal deliveries, and other on-demand services.