By Paul Conley, Content Marketing Director, The NPD Group
Roughly a quarter of American households now have access to an Amazon Prime account, shown by new research from The NPD Group and CivicScience. This suggests the online retailer’s premium service has altered how consumers shop – just a decade after its launch.
“Some say retail is changing. I say retailing has already changed. And retailers need to catch up,” said Marshal Cohen, NPD’s chief industry analyst.
NPD’s research shows more than 24 percent of U.S. households have at least one Amazon Prime account, one finding of the first major inquiry into Prime’s penetration levels. Amazon does not disclose the number of Prime subscribers or the percentage of homes reached by the service.
The NPD Group conducted a survey of its consumer panel. Its partner company, CivicScience, conducted a similar poll of online consumers. The results of both pieces of research are remarkably similar. See the results below:
Amazon Prime offers free delivery to members who pay an annual fee of $99 a year. Members also gain other perks, most notably access to a library of streaming movies and television shows. The rise of Amazon Prime has led to a surge in free-delivery services by retailers, and it has turned Amazon into a powerhouse in entertainment. (Only Netflix has a larger number of video subscribers.)
“Retailers can no longer ignore the power of membership at Amazon. It is changing the way people buy and their expectations,” Cohen said. “This will cause other retailers to catch up and take a good long look in the mirror to see just how they too must offer more services, fast delivery, and broader assortments. Add in the entertainment component, and retailers will need to look at reinventing themselves even further.”
Perhaps the most interesting figure to come out of the research is that between 30 percent and 32 percent of respondents said they had not heard of Amazon Prime. That suggests the upside potential for the product is still quite high.
“Do we expect it to grow? Yes. The value proposition for Amazon Prime is pretty spectacular from a consumer point of view,” said Don Unser, group president of NPD’s Retail Business Group.
That is also the expectation of Macquarie Research, which earlier this year predicted Amazon Prime membership will reach half of U.S. households by 2020. Macquarie’s estimate for present-day penetration is 20-25 percent. Consumer Intelligence Research Partners estimated U.S. membership in Prime at 44 million as of June 30, 2015, but did not estimate household penetration.
Certainly Amazon is pulling out all the stops to boost membership in Prime. It’s investing millions of dollars in exclusive video series like the pre-teen hit “Annedroids,” Emmy-winner “Transparent,” revenge drama “Hand of God” starring Ron Perlman, and the alternative future sci-fi thriller “The Man in the High Castle.” The online retailer/entertainment giant is also experimenting with discount pricing. Last month it held a one-day sale offering annual Prime membership for $67.
Amazon also took steps recently to limit the sharing of Prime accounts. Although the new rules limit sharing to just two adults in a home, the move appears aimed at preventing people from sharing an account outside of their household, while presumably making it easier to share streaming services within a home.
All of this makes one thing clear: Amazon Prime is part of the family in one out of every four homes in America . . . and growing.