Efficiency Of Prime, Customer Loyalty To The Program Highlighted
Investor’s Business Daily reported that Amazon Prime has about 41 million US subscribers and is in 38 percent of US households, according to a Cowen report released Wednesday. Prime membership rose 32 percent from December 2014 to December 2015, which Cowen said was bolstered by Prime Day. When asked to give one reason for Amazon’s continuous growth, Wells Fargo analyst Matt Nemer referred to Prime. Fulfillment is the company’s “weapon right now,” Nemer said, adding, “The extremely efficient distribution program feeds into Prime. There’s a lot of loyalty.” While saying Costco not Amazon invented the loyalty program, he stated that Prime helps put Amazon ahead of other online platforms. Steve Symington asserted in Motley Fool that “Amazon is well-poised to sustain this momentum into the new year,” adding that “consensus estimates call for Amazon’s full-year revenue to climb roughly 20.5%” and top-line growth acceleration of 20.9 percent in the coming year. In his analysis, Symington contended that the profitability of Amazon Web Services will offset the weak performance of its retail segment and allow the company to continue its growth trajectory. Fortune added that Prime’s continued growth makes it more difficult for Walmart, Target, and others to compete with Amazon, and Walmart and Target reported “modest” online growth in Q3 while Amazon’s sales rose 23 percent.
What This Means For Small Business
The National Federation of Independent Business previously reported on Retail Wire contributor Ken Lonyai’s advice for retailers aiming to compete with the online retailer. Lonyai highlighted negative experiences at physical stores and the NFIB concluded that the “takeaway for small businesses is knowing that their core business and effective execution are key to customer satisfaction.” These principles are increasingly critical as Amazon aggressively expands its retail operations and devotes other revenue streams toward expansion and building economies of scale.
Additional Reading
The NFIB provides advice on how small businesses can navigate e-commerce.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
