Debate rages over what exactly Amazon Prime is. Is it a loyalty scheme? Do people really pay for loyalty schemes? Should we lump Prime in with online subscription services like Birchbox or Dollar Shave Club, one that deals in subscriptions for improved customer service? Is it a triumph of aggressive marketing, or does its success reveal something about the nature of digital shopping, and the digital shopper, that we should all take notice of?
What is certainly true is that Amazon Prime commands tremendous loyalty and is a huge driver of Amazon’s billion-dollar-profit success. In our latest Future Shopper survey of digital consumer behaviour, Amazon Prime members said they spent half of their overall online spend through Amazon - more than double the amount non-Prime members said they spent there.
But Prime is, in all truth, more than a loyalty scheme. It isn’t in the business of rewarding customers for coming back - it is in the business of selling them a level of service they are prepared to pay for. The fact that consumers are quite happy to pay for faster fulfilment, free access to digital media, exclusive deals and more - and spend more through Amazon as a result - is certainly something other brands and retailers can learn from.
But another thing we should ask is - who are Prime members? What motivates them, why does the Prime offer appeal to them? Because Prime isn’t for everyone - although a considerable percentage, less than half of respondents to our latest survey (47%) said they were signed up for it, which means a slim majority of digital shoppers are still not persuaded by its wiles.
So before any brand rushes to copy the Prime model to attract more customers, it should ask itself - who exactly am I looking to attract, and does that fit with my target demographic? If your customer base is not made up of people who make up the typical Prime member, it might be counterproductive to try. At the same time, understanding more about why Prime appeals to certain people gives you two options - insight into how to do more to attract the Amazon loyalists, but also better knowledge, indirectly, of what might appeal to consumers less inclined towards the marketplace giant.
PRIME PROFILE AND PATTERNS
Amazon Prime members tend to be young. More than half (51%) of 16 to 24 year olds we surveyed are current members, rising to 55% of 25 to 34 year olds. It is still popular with 35 to 44 year olds (49%), but then there is a sharp decline, with just 30% of over 55s signed up.
Not surprisingly, Prime is most popular in countries where share of spend on Amazon is largest - the US (68% of shoppers said they were Prime members, spending an average of 52% of their digital dollar through Amazon), Germany (61% / 52%) and Spain (68% / 48%). In the Netherlands and Czech Republic, where Amazon has yet to dominate the digital retail markets, Prime membership is understandably lower (20% and just 5%, respectively).
Amazon Prime members expect delivery faster than non-members, although not by as big a margin as you might expect. The average expected delivery time amongst Prime members was 2.3 days, compared to 2.8 days amongst non-members. 40% of Prime members from our European audience did, however, say they expected delivery in 24 hours or less*, compared to 22% of non-members. More than twice as many Prime members said they thought Amazon was the best company for speedy delivery (69%) compared to non-members (33%).
Interestingly, we found barely any difference in the number of Prime members and non-members who said free delivery was an important factor in the online shopping experience - 90% in each camp, so free delivery matters to everyone. What was more noticeable was that Prime members showed more concern for the brand being ordered (79% said it was important versus 71%).
This correlates with the fact that, when asked what would motivate them to buy direct from a brand online, a higher proportion of Prime members said exclusive products (7% more), bundled and personalised products (6% more on each), and an authentic experience (5% more). Prime members were also more inclined towards a subscription model (6% more); indeed, 69% of Prime members said they had current subscription services, compared to just 35% of non-Prime members.
PRIME CANDIDATES: TECH-SAVVY AND FUTURE READY
Where the distinction between Prime members and non-Prime members really stood out was in attitudes towards and use of technology. For example, we asked our survey participants about their use of a range of emerging digital shopping technologies and channels. A third of Prime members said they currently used or had used Amazon Dash one-touch reordering buttons, compared to 13% of non-Prime members. Very similar figures emerged about use of so-called voice commerce, shopping through smart assistants like Amazon Echo and Google Home - 30% of Prime members versus 11% of non-members.
When we asked about the use of automatic re-ordering technologies in five retail categories (household products, health and beauty, food and drink, electronic consumables and clothing), Prime members were roughly twice as likely to say they already used such platforms in four out of the five, the exception being clothing.
While a majority of shoppers overall told us they expected to increase their use of digital shopping channels in the future, this inclination was stronger amongst Prime members - 69% versus 55%. Prime members are also more motivated by brands and retailers being digitally innovative, with 58% saying they wished more brands were more innovative compared to 44% of non-members, and 53% saying they are more likely to buy from a digitally innovative brand, versus 36%.
GRABBING PRIME POSITION
So how should other brands and retailers respond to Amazon Prime? Study what attracts such fierce loyalty from its members and try to better the offer, or steer clear and focus on appealing to those who show little inclination towards Prime?
If you had to sum up the typical Prime member, you would say they are, by and large, younger, tech-savvy and more open to, and indeed motivated by, innovation in their online shopping experiences, be it using new technologies and channels, or new models of buying like automatic reordering and subscription services. They value new experiences in shopping, yet remain extremely loyal to what Amazon has to offer them (compared to non-members, more than double the number of Prime members told us Amazon was the best channel available for price, access to the brands they want, delivery, returns processes, product descriptions and product search).
Is it even worth trying to take on this incredible brand reputation Amazon has built with Prime members? Some very revealing insights came when we asked survey respondents to tell us what would tempt them away from Amazon. Answers that were more popular with Prime members than non-members included better loyalty programmes, better personalisation of service and better brand ethics. Intriguingly, Prime members suggested that brand ethics and environmental credentials were more important to them in making decisions about where to shop than non-Prime members. And Prime members were surprisingly more concerned (53% versus 42%) about Amazon dominating the digital retail industry.
These are all good places to start for brands looking for chinks in Amazon’s Prime-plated armour.
The difficulty of trying to target non-Prime members is that, when you look at the stats from our survey, it isn’t that they necesarily don’t want the same things as Prime members, it’s just that they are not quite so strong a motivating factor. For example, when we asked shoppers if they wished more brands offered similar services to Amazon Prime, nearly two-thirds of non-members (62%) said yes. It is revealing that half of non-Prime members (54%) still say they like the idea of buying everything they need from the same place online. When we asked consumers to rank channels according to factors like price, product selection, availability, delivery and so on, the channel that non-Prime members consistently scored higher than Prime members by the biggest margin was other marketplaces.
Perhaps in the end, then, it would be a mistake to read too much into whether someone is or is not a Prime member when trying to build up an understanding of their preferences and motivations. With technology and innovation perhaps being the exception, nearly all digital consumers want a good price, personalised service, fast and cheap/free delivery, a good product selection with readily available information, and convenience. What Prime has demonstrated is, when you put all of these factors together, people are prepared to pay for the privilege, and this privilege drives fierce loyalty. That ultimately has to be the best lesson of all for other brands and retailers.
To read more about the preferences and expectations of Prime members and non-members, and how online consumers want to interact with brands and retailers, download a free copy of the new Future Shopper 2019 report here.
*unlike Amazon Prime in Europe where delivery is typically within 24 hours, in the US, it’s 48 hours.
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Written by Hugh Fletcher
Head of Thought Leadership (EMEA) and Head of Marketing (UK)
Hugh is a go-to spokesperson for tech trends impacting eCommerce, and one of Wunderman Thompson Commerce's most prominent through-leaders on digital innovation and change.
A note about the Future Shopper 2019 survey
Research for this Future Shopper 2019 report was conducted by independent research consultancy Censuswide. A total of 15,188 consumers, who shop online at least once a month were surveyed, across 8 international markets, led by UK and US.