Just how important Amazon’s Prime shipping offer has been to the online giant’s success can be seen in data recently compiled by the Codex Group. Last Monday, Amazon announced that Prime, which allows customers free two-day shipping for a $79 annual fee, had surpassed its free shipping on orders of $25 or more in terms of use. Codex surveyed book buyers in May about their book purchases the previous month; those who were Prime members without Kindles spent $173 on all general merchandise and services, including books, at Amazon compared to $41 in spending by nonmembers, more than three times as much. Prime members who own a Kindle spent even more, $175.
Codex president Peter Hildick-Smith said Amazon has effectively used the one-two punch of Kindle and Prime to grab market share across a wide range of categories. “Amazon has used Kindle very effectively to outcompete physical retailers in books, while their Prime program is showing significant impact in outcompeting retailers across all merchandise categories,” Hildick-Smith said. “With Amazon Prime, their customers spend over three times more, estimated at more than $1,500 annually, than non-Prime shoppers, so we expect to see a great deal more Amazon investment in marketing Amazon Prime through this holiday season and beyond.”
The combination of Kindle and Prime has helped Amazon come within $4 of capturing the same amount of monthly general merchandise spending among the survey sample as Target; in May, an average of $104 was spent at Amazon compared to $108 at Target. Once Amazon passes Target in spending by book buyers, next in its sights is Wal-Mart, which captured $144 in total general merchandise spending by book buyers in May.
