More Than Half Of U.S. Subscribers To Be Subscribed To Amazon Prime

Predictions from Cowen and Co. indicate that over 50% of households in the United States will be subscribers of Amazon Prime before the end of this year. A study done by the research firm showed that 49% of the respondents were subscribed to Prime by last month. The study had respondents numbering 2,500 consumers in the United States.

According to John Blackledge, the recently held Prime Day which resulted in the highest number of Prime subscriptions in a one-day period ever is what will assist Amazon in driving Prime membership beyond the 50% mark. Additional help will also come from this year’s holiday shopping season as well as the back-to-school shopping.

More offerings

Part of what is making Amazon Prime increasingly appealing is the rising number of offerings such as Prime Music, Prime Video, Prime Pantry and Prime Now.

“Prime has maintained healthy growth despite its scale. [Its] constantly evolving value proposition [is helping too],” wrote Blackledge in a client note.

Though Amazon does not reveal the number of Prime subscribers, Blackledge estimates that by July of this year the online retail giant currently had Prime members numbering over 54 million in the United States. Last year Cowen and Co. had estimated the number of Amazon Prime subscribers to be 46 million.

Lower-income households

The households where Amazon Prime penetration has been lowest were those making under $25,000 in a year. Amazon Prime’s room for growth in the lower-income households, however, still remains high. Some of the initiatives Amazon has introduced to court this group includes offering discounts to households that rely on government assistance. The Seattle, Washington-based online retail giant has also introduced a payment option where members can pay small amounts on a monthly basis instead of one annual payment of $99.

Growing Prime membership among the U.S. households earning less than $25,000 per year is important since Amazon has almost fully penetrated the upper-income groups. Currently over 80% of the wealthiest households in the United States are subscribed to Prime. According to Blackledge the membership program is the most important driver with regards to the online retailer’s business in the long term. This is because Prime members are among the highest spenders as well as being more frequent spenders. They also compare prices less frequently.

The revelations by Cowen and Co coincide with a forecast by MKM Partners which sees the Amazon stock hitting a price of $1,275 per share in the next 12 months on the back of higher revenues resulting from growing demand.

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