Daily Insights

Amazon Seeks Optimal Prime

By: Lakshmi Kalluri | May 02, 2019

Facing decelerating growth from its traditional retail arm, Amazon is expanding its high margin consumer-facing and seller services. The digital giant reported its most profitable quarter in Q1 2019, with over 101 million US consumers now subscribing to Prime. As the membership cost increases, however, the retailer will have to continue expanding the value proposition that a Prime membership offers.

The membership currently includes a wide range of products and services, from Prime Wardrobe to Prime Video. So far, these efforts seem to be paying off. According to Gartner L2’s report on the Amazon consumer, 77% of subscribers cite continuous innovation of services and products as one of the most appealing aspects of Prime membership. 

Prime Video

Video is one of Prime’s most significant services. About 60% of Americans subscribe to a video streaming service, and Prime Video holds the second-largest subscription base with 35% of market share (Netflix, comparatively, has 51%). Traffic to the platform continues to accelerate and has increased 150% since January 2018. To differentiate itself from its mainstream competitors, Amazon Video offers consumers original shows and movies as a part of their Prime subscription, with options to add on popular channels like HBO, Starz, or Boomerang. Additionally, Prime Video invests in films and award-winning series like “The Marvelous Mrs. Maisel” to market itself toward more potential subscribers.

Amazon will likely continue bolstering offerings under the Prime umbrella to improve the stickiness of its subscription model. Rumors have suggested a new ad-supported music streaming service from Amazon, which would compete against Spotify. As the retailer focuses on expanding Prime services, monetization of these services would be the next sensible step forward. To ensure they are ahead of the competition, brands would be wise to monitor developments on Prime Video and Music.

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