100 Million for Amazon Prime

More than 100 million people globally are now paying for Amazon Prime, a sign of how Amazon.com Inc. has used the service to evolve from an online marketplace that struggled with profitability into an e-commerce powerhouse. Amazon, which has never disclosed the number of Prime members before, revealed the figure Wednesday in Chief Executive Jeff Bezos’s closely followed annual letter to shareholders the company said in late 2015 that it had “tens of millions” of Prime customers.

Amazon’s story to investors has largely been one of scale. In the company’s view, having a large number of customers and clients has allowed it to spread costs broadly and continue investing in technology.  Launched 13 years ago, Amazon Prime includes perks such as free and discounted shipping, music and video streaming, and free e-books. Prime costs $99 a year or $12.99 a month in the US, with similar membership prices in 15 other countries.

The fees are just one-way Amazon makes money off the program. Amazon shipped more than 5 billion items through Prime in 2017, according to the letter. More than half of the items sold through Amazon now come from third-party sellers. The company’s own goods are also selling well, according to Bezos, who says last year was the best yet for Amazon Hardware sales, like Echo and Fire devices. Amazon Prime is still growing. It added more new members in 2017 than in previous years, and more new members on Prime Day than any other single day since the program began, Bezos said.

“This is Bezos saying Prime continues to be a healthy, growing platform,” said Michael Levin, partner and co-founder of investment and market-research group Consumer Intelligence Research Partners LLC. “Bezos is basically saying ‘Here’s our installed base, come and get us.’”

Colin Sebastian, a Robert W. Baird & Co. analyst, said Amazon’s disclosure on its Prime member count was “in-line to slightly above expectations.” Mr. Sebastian had estimated the figure was close to 100 million after Amazon reported its fourth-quarter earnings report in early February. Last year Amazon brought in $9.72 billion in revenue directly from subscription services, including fees from Prime members. The company also benefits from Prime members who tend to spend more money on Amazon than nonmembers and do so more frequently.

 

Keep those stops tight

Todd “Bubba” Horwitz