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Amazon Prime conversion and retention rates are astronomically high

By Shawn Knight
Jun 2, 2016
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  1. Amazon Prime is one of three key pillars that CEO Jeff Bezos recently spoke of. It’s arguably the most consumer-facing of the three (the other two being its retail marketplace and Amazon Web Services) but the fact that Amazon doesn’t disclose its membership numbers leads to lots of analysis and speculation from third parties.

    One of those, Consumer Intelligence Research Partners (CIRP), recently released an analysis of Prime membership patterns. What it reveals is astronomical conversion and retention rates that any company would envy.

    For starters, CIRP found that 30-day free trial conversion to one-year paid membership rates have recovered following Amazon’s price increase to $99 a year. Specifically, data indicates that 73 percent of trial members make the jump to paid members. Furthermore, 91 percent of first-year paid subscribers renew and 96 percent of second-year paid subscribers sign up for a third year.

    If you recall, Amazon raised the price of its annual Prime membership from $79 to $99 in March 2014. The change was the first price increase in Prime’s history but people still weren’t happy. To combat the pushback, Amazon bolstered Prime’s benefits by adding more streaming videos, offering a selection of free e-books, online photo storage and more.

    In case you missed it, be sure to check out our article that delves into the many benefits of Amazon Prime (some of which aren’t promoted as heavily as others).

    Permalink to story.

     
  2. amstech

    amstech TechSpot Enthusiast Posts: 1,457   +606

    You see this happen all the time on Steam now.
    A game will be FTP for a few days, and its a great way to sample the bread before you buy the loaf.
    I remember when I used to get PC Gamer mags that came with 3-8 demos of games, its how I found Half-Life, the Uplink Demo.
     
    Reehahs likes this.
  3. Uncle Al

    Uncle Al TS Evangelist Posts: 1,682   +788

    Another interesting item. Since signing up for Prime I continue to receive letters in the mail each week telling me how I'm missing out by not buying movies and other recordings. At this point they could have skipped the ads and reduced my cost by $50 which I would have appreciated more. At this point, Prime will be history after it runs out. Nothing worse that an obviously poor business decision that hurts rather than helps the customer!
     
    wiyosaya likes this.
  4. EClyde

    EClyde TS Guru Posts: 710   +183

    I didn't buy Prime. I won't ever. I am the guy that helped increase your price. My daughters have Prime and they buy me stuff all the time, charged to my card, and I get the free two day shipping. If you have friends or family members and you trust them...check it out
     
  5. NicktheWVAHick

    NicktheWVAHick TS Enthusiast Posts: 69   +43

    Click "Buy" today....it's at my doorstep tomorrow...multiply by 365 days/year...add in "no taxes" (sometimes)...just do the math. And all before I've even changed my underwear....hell, just buy new underwear and get rid of washer/dryer.....
     
    jauffins and wastedkill like this.
  6. jauffins

    jauffins TS Enthusiast Posts: 85   +24

    I placed 221 Amazon orders last year, and aside from a dozen or so packages that arrived late for one reason or another (FedEx had a bad shut-down last February due to a snow storm in Nashville, if I recall) they all arrived within 1-2 days. I'd say that helps me, the customer, quite nicely.
     
  7. PGHammer21

    PGHammer21 TS Rookie

    My mom (not me) is a Prime accountholder. She doesn't use ALL the features (yet); however, the big one she DOES use is the free shipping - that all by itself saves more than that annual fee every year, despite the under-leverage. For in-stock items, that also means - at worst - twenty-four-hours from warehouse to doorstep; added to free shipping, that's not just a money-saver, but an aggro-saver as well. (That is, in fact, why Prime was leveraged for my three-item minimum rebuild of my desktop last Christmas, as opposed to paying less and shopping local - no driving, and I had everything by 10:30 AM the next day. Order placed at 3PM previous day, left Lexington at 6 PM for UPS Memphis; cleared Memphis thirty minutes later and arrived at UPS Laurel/Beltsville at 11 PM that night; Laurel/Beltsville is one of two UPS regional centers for the greater DC area due to proximity to both I-95 (ground shipments) and Marshall/BWI (air shipments); the other is in southern Arlington, VA (south of Crystal City, but north of Alexandria) and right on US 1 - thus servicing I-95 (ground shipments) and Reagan National (air shipments) - I'm in Maryland (despite being closer to Alexandria, VA), thus Laurel/Beltsville. Laurel/Beltsville to local UPS office (Waldorf, MD - Pika Drive off Business Route MD 5) in the overnight; delivery to me is @ 10AM the day after ordering.)
     
  8. Trillionsin

    Trillionsin TS Evangelist Posts: 1,324   +136

    Wait, you what? I signed up for Prime, and I havent received a single letter from Amazon or their services. I do not use Prime for their digital media services.
     
  9. Uncle Al

    Uncle Al TS Evangelist Posts: 1,682   +788

    My congratulations, sympathy's, and congratulations!
     
  10. TeeJay

    TeeJay TS Rookie

    LOL... you paid some extra money in the form of higher prices with Amazon. Not only have I found many of their prices considerably higher in the stores, I've also found their "prime" prices are excessively high. While I didn't order as much as you, I did average 150+ invoices for over four years. When I calculated the last year's items, I found I had paid hundreds of dollars more to Amazon for those "prime" goods and their "free" 2-day delivery. I had trusted Amazon to at least provide fair pricing, but I found their pricing was anything but fair (as retail goes). when they upped the price of Prime, I dumped it like a hot potato. Today I only USE Amazon for general pricing purposes, and order through other parties when possible. Not only am I getting better prices than Amazon's, but most highly-rated vendors will do wonders with customer service. I was a fool to trust Amazon... don't be a fool like I had been. Today I save literally hundreds of dollars per year (if not more). As for the 2-day shipping scam, If I need it that fast, I can find it locally for a much better price than Amazon offers, or even some of the vendors.
     
  11. TeeJay

    TeeJay TS Rookie

    Nick, you do realize that, by most state's laws, you'd be considered guilty of tax evasion. I sure hope you don't have "fair use" tax laws in your state. If you do, and you don't pay the tax on those items (on your tax return), it could mean a few years in prison for you (if it's deemed it was intentional on you part, which it is).
     
  12. DAOWAce

    DAOWAce TS Booster Posts: 249   +30

    Meanwhile they've introduced "add on" items, prime exclusive items, and raised the free shipping price per order from $25 to $35 to $50.

    Surely that couldn't have anything to do with Prime retention rates..
     
  13. jauffins

    jauffins TS Enthusiast Posts: 85   +24

    Nobody is saying you should blindly order everything from a single retailer, and many of Amazon's grocery items are order priced.
     
  14. SultanGris

    SultanGris TS Booster Posts: 158

    I've noticed prime eligible items are slightly higher than the same item from other sources also. It's not significantly higher in most cases though, just a few bucks but some things are 10-20$ more so it pays to check multiple sources. Im sure it's to offset shipping as two day shipping is astronomical in cost and your $100 yearly fee covers about 6 smaller items or one or two large ones. I used to sell and ship lots of 3 pound items and two day shipping cost me around $8-16 depending on distance. I live in a rural area and have to travel 120 miles round trip to get things otherwise so I feel it's still worth it, plus I stream lots of tv, I haven't used overpriced cable or dish in like 8 years. Netflix is better than prime though, prime has to buffer sometimes and it's not a problem on my end. 60MB download fiber internet and Netflix never has that issue.
     
  15. jauffins

    jauffins TS Enthusiast Posts: 85   +24

    Slightly higher, because third party sources under-cut them. If an item is $50 at a retail store and $50 with Amazon Prime, that doesn't make the $49.25 price from a third party reseller with 5 day shipping somehow a fantastic deal. I'll pay the "extra" $0.75 because I would have paid that anyway, the difference being my shipping is free and I'll get it tomorrow or the next day.

    Prime has tons of higher than what I find acceptable pricing - most household goods are a bad deal on Prime, and "Amazon Prime Pantry" is a crock, adding a shipping charge to an item Amazon otherwise advertised to me as a Prime item.
     
  16. SultanGris

    SultanGris TS Booster Posts: 158

    I meant slightly higher than available in a physical store or online from another website or Amazon seller. Most things were cheaper on prime when they first started but most are not anymore. I pretty much only buy prime items cause I want it fast and other sellers price is much higher after shipping costs usually anyway.

    I agree 100% about prime pantry, I never buy anything prime pantry. Often I only want one or two things and can't/don't want to fill a pantry box, plus I feel paying shipping when I've already paid for it is bullhockey! Probably sill cheaper than driving 120 miles getting 15-18mpg but I'm stubborn and it's the principle of the matter. I freaking hate pantry cause they've made lots of items I used to get with prime no longer available for prime shipping to bolster the pantry shipping charge bs.

    But like I said shipping is expensive so I'm sure they are losing too much money shipping heavy 2-8$ household items for over $10 so I don't mind paying a little extra than store price for the convenience of shopping in my underwear grim my couch whenever I want as well as not having to load the items at the store and unload them again at my house. I get hundreds of items a year. The only downside is I tend to spend more money when I can just click on things instead of having to physically go get and carry them around with limited cart space, ha!
     

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