Document 6484396

Michael R. Levin ([email protected])
Joshua N. Lowitz ([email protected])
111. West Washington Street, Suite 900
Chicago, IL 60602
312.344.3664
www.cirpllc.com
FOR IMMEDIATE RELEASE
Amazon Prime Pricing – A Sensitive Subject
Churn Data Belies Intent to Renew Memberships
Loyalty Depends on Video, Other Factors
CHICAGO, IL – February 13, 2014 - Consumer Intelligence Research Partners, LLC
(CIRP) today released new survey analysis of member loyalty and price sensitivity of
Amazon Prime members from Amazon, Inc. (NASDAQ:AMZN). This analysis indicates
that Prime membership is growing even as customers already cancel memberships at a
higher-than-expected rate, and a price increase could dampen membership growth.
Based on our survey analysis, we estimate that as of February 7, 2014 Amazon had
approximately 26.9 million Amazon Prime members, an increase from our estimate of
16.7 million as of September 30, 2013. Amazon Prime members account for 45% of all
Amazon customers (see chart). Among Amazon buyers, 32% are not and never have
been Amazon Prime members, while 23% previously had a Prime membership that they
did not renew.
Amazon Customer Prime Membership Status
none 32% Amazon Mom 3% past 23% Amazon Prime 39% Amazon Student 3% “Almost a quarter of Amazon buyers in the survey period had a Prime membership, but
let it lapse,” said Josh Lowitz, Partner and Co-Founder of CIRP. “One way to look at this
is that Amazon Prime is not for everyone, but trying out Amazon Prime is for almost
everyone. About three-quarters of those that did not renew their membership did so
because of cost.”
Amazon Prime Price Sensitivity
Among Amazon Prime members, almost all intend to renew their current membership at
the current $79 price. 94% of survey subjects “definitely” or “probably” will renew their
membership (see chart).
Intent to Renew Amazon Prime
Probably will not renew 5% Probably will renew 27% Definitely will not renew 1% Definitely will renew 67% “CIRP also checked the renewal intent at the proposed $99 and $119 prices, and found
dramatically different results,” said Mike Levin, Partner and Co-Founder of CIRP. “At
$99, under half of subjects think will either definitely or probably renew. And at $119,
40% of subjects say they will definitely not renew their membership.”
Frequent use of Amazon Prime free Instant Video seems to be the most powerful lever
to promote loyalty. Among frequent users of the Amazon Prime Free Streaming Video
service, defined as those that use it at least once a week, 100% say they will “definitely”
or “probably” renew their Amazon Prime membership, assuming the current price. At
$99, 69% of frequent video users say they will “definitely” or “probably” renew, and at
$119, 29% say they will “definitely” or “probably” renew.
“Amazon has created a set of loyal customers using both free shipping and free
streaming video benefits of Amazon Prime,” continued Lowitz. “Yet it seems that even
these dedicated customers have their limits, and a 50% price increase to $119 could
push a significant portion of them away from Amazon Prime.”
CIRP based these findings on its survey of 300 subjects who made a purchase at
Amazon.com in the three-month period ending February 7, 2014. For additional
information, please contact Mike Levin ([email protected]) or Josh Lowitz
([email protected]) at 312.344.3664. Further information on CIRP, which provides
securities research to the investment community using advanced consumer market
research strategies, methods, and techniques, is at www.cirpllc.com.
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