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Why All the Perks? Because You'll Spend 68% More With Amazon Prime

Amazon goes out of its way to make Prime attractive to potential subscribers, because they're the most loyal customers of all.
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Despite the fact that a recent DealNews poll found that Amazon Prime subscribers aren't all that interested in the program's non-shipping benefits, Amazon still offers a growing stable of perks to draw in more $99-per-year subscribers.

In fact, every perk, every app, and even every piece of Amazon hardware is designed with a singular purpose: to draw you into the Amazon ecosystem, by way of a Prime subscription. Prime subscribers are the heart of Amazon's business model because they're an extremely loyal group of customers. Read on to find out more about the lifeblood of Amazon.

How Amazon Prime Works for Amazon

First off, Amazon isn't too concerned about turning a profit on hardware like the Fire Phone and Fire TV. "While Apple boasts margins of more than 20% on its iPhone and iPad, and Google makes money from the advertising it delivers through its Android mobile OS, Amazon says it's happy to break even — or even take a loss — on its gadgets for the chance to win repeat customers who will keep coming back to the company's ecosystem and ultimately spend more money at its store," CNET explained.

Perhaps unsurprisingly, Amazon Prime has been very successful at creating those repeat customers. "Amazon Prime members surveyed said they spend $538 per year, on average, at Amazon — 68% more than the $320 per year that non-Prime respondents said they spend on Amazon," according to a recent survey by RBC Capital Markets, as reported by Quartz. "Some 61% of respondents said they've spent more money on Amazon after becoming Prime subscribers than before. And Prime subscribers were more likely to have spent more than $200 over the prior 90 days."

If a Prime customer is going to spend 68% more money at Amazon, then Amazon has every incentive to try and sign up as many Prime customers as possible. Amazon doesn't disclose its Prime subscription numbers, but investment firm Piper Jaffray estimates the Prime population at around 21 to 23 million, according to the Motley Fool. The investment blog posited that the more Prime subscribers Amazon has, the better chance it has of bringing its substantial shipping costs down, and its stock price up.

Amazon Prime

Does Spending More Equal Saving More?

Over the last 12 months at DealNews, about 10% of the deals we listed came from Amazon. To put that into perspective, similar "everything stores" Sears and Walmart were listed 5% and 4% of the time, respectively. In fact, in the past year we listed Amazon more often than any of the many, many other retailers that we list. Because we only list the lowest price available for a given product, that means you're somewhat more likely to find a price low while shopping at Amazon (though we definitely still recommend doing some price checking).

As we previously reported, Prime subscribers know they're spending more with Amazon, but the majority feel they're saving more money in the long run. The fact that Amazon offers a significant number of price lows could suggest that these subscribers aren't just fooling themselves. That said, it's important for Prime members to understand that they definitely are spending more money with Amazon, savings or no.

Now that you understand Amazon's motivations for attracting Prime subscribers, do you feel less inclined to pay that $99 fee? Or do you feel vindicated by Amazon's place at the top of the deal heap? Share your thoughts below!


Features Writer

Marcy pens consumer news stories of all sorts, in addition to adding pithy prose to many of the roundups you see every day. Her work for DealNews has appeared on sites like Lifehacker, the Huffington Post, and MSN Money. She is by far the most metal member of the DealNews staff, and you can see why by following her on Twitter @ThatBonebright.
Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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10 comments
AshevilleCat
I spend more and I save more. When I think of how much money I spend on gas driving around trying to find the things that I want it forces me back to the computer and online. The money I spend annually on Prime I would be spending on shipping and handling on a daily basis. I'm sure it comes out to more than $99 a year. Throw in excellent customer service (a rarity these days) and great values and you have a winning combination! I intend to continue paying my hundred dollars a year for a long time to come.
carmarhal67
I, too, love my Prime membership. Not only am I able to order things I need for a lower price, the customer service is top-notch. A couple of examples: My elderly mother-in-law pre-ordered a video game for my son, as a Christmas gift. Before it came, she moved a few blocks away. The game was delivered to the old address and the new tenants apparently decided to keep it for themselves. Amazon was very understanding, and sent another game to her new address. I don't know if they tried to deal with the thieves. Another time, I ordered clothes for my husband that ended up being the wrong size. When I went to the site to find out about returns/exchanges, I was told not to worry about returning them and was immediately issued a refund. We'd been Prime customers for a couple of years by then, so I don't know if they'd have done that if we were newbies. We also use the Prime instant videos, and we have a few Kindle Fires, as well, so Amazon is pretty much a part of our lives.
Scroogus Maximus
Common knowledge by now how Wal-Mart and other big box stores treat their employees- low pay, lower morale, and rock-bottom rights & hope of promotion.
In contrast, everyone I know who works at Amazon is happy and feels valued as an employee.
If you were to run similar numbers on Wal-Mart's advertising for products that break, are out of stock, or are in a store with such poor working conditions that workers change monthly, I suspect you'd find WM spends at least that much per customer.
If something goes wrong with my Amazon Prime order, their customer service is something WM can't match: HELPFUL!
VERMINATOR
I cannot expand more on others reasons for choosing Amazon, but there are two things I will say.
I end up in WalMart about twice a year since I dived head first into Amazon.
Every time I go to WalMart, I experience.
At least 4 items I want to buy are out of stock.
Price machine is broken in at least one location.
Bathrooms. Ooh. No paper except what covers the floor
You would not believe some of the slob behavior that goes on in the bathroom.
If WalMart checks every hour why does it look a mess no matter when you enter their bathrooms?
One or two lines open, 8 to 10 folks in each one.
Amazon allows me to do for myself.
I have chronic pain & illness. Amazon allows me to feel independent. (I am blessed though, many folks have things much worse!)
What it does for my self confidence $99 is worth it.
I do not have to rely on or ask for much help from friends & family.
I can do for myself. priceless.
I spend $300 minimum each month at Amazon because they treat me like royalty!
mayad
I'd buy the same stuff at Amazon or some other store so I'm not necessarily spending more because of Prime. I'm spending more because of the convenience and ease of shopping on line
catfan
I have been a prime member since it first started, I love it and would never give it up. An added bonus is when I buy something from Amazon and it's defective or I don't like it, I can let them know, and buy the time I ship it back I will already have the new one waiting for me at my door. Now that is service! Only store I have ever shopped with that sends the replacement before you even ship back the defective. Now that is an A+ company! Plus, sometimes if I am not completely satisfied with an item, they will even offer me a discount, just because they strive to keep their customers satisfied and happy. Recently, with alot of items i have purchased, I have been offered free overnight shipping instead of the free two day shipping. I don't know if this is going to be a regular thing, but I really like receiving items the next day for free! Even though with prime, overnight shipping is only an extra 3 dollars, so I usually choose that anyway. Keep up the good work Amazon!
thomasd04
I understand that I may not be saving a whole lot by shopping at Amazon. However, I have a few other reasons why I do, and will continue:
1. Accessibility: I don't have to drive anywhere and can access it from anywhere. If I have an idea while walking in a park, I can order it right then and there.
2. Selection: It doesn't matter what physical store I go to; nobody will have the selection Amazon has to choose from. I don't have to drive store to store.
3. Research: I don't buy anything over $10 without doing some research first. I could spend $XX on consumer reports or I could read reviews from people who have already bought and used the products. This alone has saved me time and money.
4. Customer Service: I've had some problems with products and some orders and Amazon has fixed them every time.
5. Receipts: Who in world files their paper receipts?!? If I want information on something I bought before, I just look it up. Easy.

I love Amazon and feel it's worth every penny!
patriciae
Love Amazon and amazon prime. Save 20% on subscribe and save. Can ship Gifts across the country to my grandchildren for free and it gets there in 2 days. Would not give it up.
Kelpe1925
I think everybody already knows what you posted. It's worth it to us, because we pay less on Amazon then driving to Wal-Mart, or anywhere else shopping for multiple items when the store you go to doesn't have what you want, which includes gas prices, dealing will people and waisting our hard earned time. Also, to get free 2 day shipping (which sometimes costs more thant he product itself) on most items and have the reviews to go off of to boot. The guy is a genious... he is taking our buisness because he is giving us a reason to purchase through Amazon. I don't care about the extra stuff that comes along with it, might be a nice add, but I don't use it. Also, I get half off because I'm an .edu address. Also, mothers get savings as well. Of course, I always shop around to make sure it's worth it before I buy at Amazon... but most of the time it is. There are so many benifits, it's almost hard to list them all.
Dayfive
I think it's worth it for me because I like free shipping to my door step and yes, I realize I shop more knowing I am a prime member, however, it works for my schedule as I can't go out to brick and mortar stores much at this time. I shop from my smartphone which I thoroughly have come to depend upon.
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