Amazon has a near-perfect retention rate of U.S. Prime subscribers after they’ve subscribed for two years, according to Consumer Intelligence Research Partners (CIRP), but the number of subscribers committing after trial memberships is dwindling.
The research firm found that 93 percent of U.S. Amazon Prime subscribers continued with a membership after one year, while this jumped up to 98 percent after two years. However, just
64 percent of trial members converted to a paid membership in March, down from over 75 percent at its peak, according to Mike Levin, CIRP partner and co-founder.
“Retention after a year has always been high, and at over 95 percent after two years has been the envy of any company that sells memberships of any sort,” noted Levin. “But conversion from a 30-day free trial membership has declined, from over 75 percent at its height to under 65 percent today.”
He added: “With the Prime members who get the most out of their membership already signed up, new trial members are less likely to convert to paid membership. Further, the option to pay for Prime membership on a monthly basis makes it even easier to let a trial membership lapse.”
To be sure, signs of saturation are showing: CIRP said Prime subscription growth slowed in Q1 of this year at a rate that was even slower than previous first quarters. Amazon Prime grew 2 percent in Q1 2018 vs. Q4 2018, which is similar to the first quarter increase last year, said Josh Lowitz, CIRP partner and co-founder. However, March year-over-year growth dropped 5 percent, from 16 percent growth in March 2017 to 11 percent this year.
CIRP estimated that Amazon currently has 103 million U.S. members, all of whom are good business for the retail giant: A Prime member spends $1,400 on average at Amazon each year vs. the $600 non-Prime Amazon shopper.
Two years ago, the average Prime member spent $1,300 per year vs. the non-member’s $700, according to CIRP.
CIRP’s research is based on surveys of 500 U.S. consumers who made an Amazon purchase between January and March.
Amazon.com Inc. shares were trading at $1,887.76 per share on Monday afternoon, up $26.07 (+1.40%). Year-to-date, Amazon.com, Inc. (AMZN - Get Rating) has gained 25.69%, versus a 16.66% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Twice.