Pam Goodfellow, ContributorWith Amazon’s planned acquisition of Whole Foods signifying another step forward in its path to retail domination, one must ask: who isn’tenamored with Jeff Bezos & Co. at this point? With all due respect to Amazon, it seems that plenty of people are willing to pass on Prime. New analysis from Prosper Insights & Analytics reveals that while Amazon Prime memberships continue to grow, an estimated 35 million consumers have quit Prime – and are looking to competitors for their shopping needs.
On the plus side for Amazon, according to Prosper’s June 2017 survey of more than 7,000 U.S. adults, interest in Prime is alive and well with 44% of consumers confirming memberships, rising more than 30% from a year ago and reaching a new high. However, among the remaining 56% who are non-members, one-quarter – about 35 million shoppers – admit that they have had Prime at some point in the past. Three out of four (78%) of those who have broken up with Amazon Prime were simply flirting with a trial membership while the remaining 22% had invested in a paid subscription.
As one might expect, the minimum $99 expense of Prime (more for those making monthly payments) was the clear reason shoppers gave the heave-ho to their memberships. Some ex-Primers simply stated that they couldn’t afford the rate or saw it as an unnecessary expense, while others weren’t buying enough to justify the cost or didn’t find value in the other perks which are part of the Prime package, such as video and music streaming.
Indeed, the latter reasoning is justified by the fact that free two-day shipping is the major driver of Prime sign-ups. Prosper’s consumer research indicates that more than nine out of ten current memberssubscribe to Prime for the shipping incentive, while about half are motivated by access to Amazon Video streaming. Significantly fewer cited other benefits – Prime Music, early access to Lightning Deals, Prime Reading, Audible listening, or Prime Photos – as reasons to invest in Prime.
Here’s the real rub for Amazon, though: the online giant’s relationship with ex-Primers isn’t quite so “sticky” after break-ups. Prosper’s Composite Shopper Preference Index (an aggregate of the major merchandise categories in which a particular retailer competes) reveals that former Prime members are 23% less likely to shop Amazon than adults in general, and instead show an above-average preference for competitors Target and Walmart.
What’s compelling about our Shopper Preference Index in this instance is that these figures have been benchmarked to shopping trends among adults in general, leveling the playing field in terms of these retailers’ sizes, merchandise offerings, and locations (i.e. digital and physical stores). Put simply: ex-Prime members are just not that into Amazon.
Propensity of select consumer segments to shop Amazon, Walmart, and Target compared to U.S. adults.
Naturally, current Prime members are carrying on a love affair with Amazon with a Composite Index scoring 62% higher than average. These shoppers aren’t so keen on Walmart (at 15% below average); however, they still exhibit above-average tendencies to shop Target. And not surprisingly, loyalty to Amazon is lowest among shoppers who have never had Prime; instead, they tend to favor Walmart.
Despite their break-ups, about a quarter of former Prime members indicate that they are considering reconciliation with Amazon. Most of these shoppers are considering re-upping their Prime memberships in the next six months or so, just in time for the all-important holiday shopping season.
Pam Goodfellow is Principal Analyst for Prosper Insights & Analytics™, global leader in consumer intent data serving the financial services, marketing technology, and retail industries.