Amazon’s Jeff Bezos said more than 100 million paying customers have signed up for Amazon Prime, the delivery and content business that’s at the heart of its sales growth.
The CEO and founder, in his annual letter to shareholders, said last year more members joined Prime than in any previous year. The number tops recent analyst estimates.
Amazon’s Prime members get free, two-day shipping, access to Amazon Prime Video, online storage and some music and access to a Whole Food rewards program/membership.
But it is the capacity of the program to more tightly knit customers into the Amazon ecosystem that make it so valuable.
Once members have access to free shipping, they immediately begin ordering more on Amazon and less elsewhere. Once they have access to Prime Video, they have less incentive to sign up for other streaming video offerings. As Amazon adds more perks, leaving the system becomes less likely.
And once inside, they do more and more of their shopping there. Prime subscribers spend a lot more on Amazon — $1,300 per year on average — compared to about $700 for non-Prime members, according to Consumer Intelligence Research Partners.
Increasingly they are buying items sold by other retailers, what’s known as third-party sellers.
Last year, for the first time in Amazon’s history, more than half of the units sold on the site worldwide were from these third-party sellers.
In addition, sales across national borders made up more than 25% of total third-party sales.
“They’re becoming the e-commerce portal for gajillions of small businesses around the United States,” said Michael Levin, a partner at Consumer Intelligence Research Partners, an equity securities research company.
“It’s pure e-commerce. It’s like Uber, there’s no inventory. And it gets them deeper into the retail ecosystem in ways that they could never have done themselves,” he said.
On the Alexa front, Bezos reports that Amazon’s voice-recognition AI is becoming a better listener. The program’s ability to hear when the user is far away from the microphone (called far-field speech recognition) has improved 15% over the last year.
Alexa is also getting better at understanding what’s said. The program’s Alexa’s spoken language understanding has increased by more than 25% over the last 12 months.