From Business Insider:
Amazon’s Prime machine might be slowing down.
Buried in Amazon’s latest earnings report is evidence that fewer people are signing up for Prime.
The way Amazon accounts for revenue from Prime subscription fees in its earnings has changed this year, which provides a look at how Prime membership has slowed down, according to analysts at Normura.
“The new straight-line approach to recognizing Prime Fees provides a look at Prime Membership growth, which by all accounts does appear to be decelerating,” Nomura analysts said in a note to investors on Friday.
. . . .
This comes after a price increase earlier this year, when Amazon bumped up the cost of a Prime subscription by $20, to $119 yearly. Amazon also raised the price of a monthly subscription to $12.99 a month in January.
. . . .
It isn’t the first signal that Prime growth has stagnated. According to a recent report by Consumer Intelligence Research Partners, Prime’s membership growth appears to be slowing in the United States.
The firm estimates that there are a total of 97 million Prime subscribers in the US. Over the past 12 months, that number only grew 8%, which is the slowest rate recorded since CIRP started tracking Amazon Prime subscriptions in 2012.
Link to the rest at Business Insider
I kind of get worrying about new subscribers, but wouldn’t the more telling thing be member retention vs fall off?
I suspect it doesn’t tell the story the guy wants to tell.
All subscription businesses have a certain amount of unavoidable churn–people dropping off the rolls for reasons ranging from affordability, to dissatisfaction, to well, death, and being replaced by new subscribers.
The net growth or decline is actually the better metric for the health of the service. For a mature service like Prime the ratio of subscriber growth to the growth of the economy is more telling: are they growing as fast as their target market or lagging?
For example, the entire US retail sector is projected to grow in the 3.2-3.8% for 2018. Against that, Prime’s 8% growth looks quite healthy and, again hints at growth from the non-retail perks.
Business Onsider ADS.
“… fewer people are signing up for Amazon Prime …”
You would think they’d understand market saturation by now.
Minor detail: there are “only” 126 million households in the US.
https://www.statista.com/statistics/183635/number-of-households-in-the-us/
So 97M Prime subscribers means a 77% household penetration.
That by itself implies they are closing in on the maximum possible, even without account sharing among family members. Factor in a 15-16% poverty rate and account sharing and pretty much everyone who can justify Prime already has it.
Against those numbers 8% growth is actually impressive.
Since not all perks are shareable like the shipping perks the implication is some of the growth is due to those perks rather than the ecommerce. Best guess it’s Prime Video.
It’s a shame that all that’s left for Prime growth is the rest of the world.
India will keep them busy for a while.
Anecdotally, that’s exactly what happened in my household. We don’t actually order from Amazon more than once every 2-3 months but we dropped Netflix for Prime Video when we found out that all the new releases were Netflix productions we didn’t want to watch and about 75% of the stuff we did want to watch was on either Hulu or Prime.