Amazon.com Inc. has been very successful in recent years as it has gone from a website that sold paperback books to an online mega mall that sells everything imaginable, as well as their own brand of products. How does this company plan on staying on top and continuing to fight market rivals such as Wal-Mart and Apple? Two word: Amazon Prime.
This feature is by no means a new innovation for the company; however this program that they offer to customers is vital to keep them loyal. The program was first introduced to offer quick shipping for only $79.00.
Another feature is a digital video service for Prime customers.
There are over 13,000 movies and TV episodes available and Amazon is forking out an estimated $350 million per year to studios. But now, it is getting even better. Amazon announced that there will be a digital book-lending service for Prime customers who also own the Amazon kindle or other Amazon tablets. The customer can keep a book for as long as they want, but can only borrow one book at a time and at maximum one book per month…so for those of you who enjoy breezing your way through novels, think of it as a free novel every month.
Gene Munster, an analyst for Piper Jaffray, states that Amazon spends an estimated $90/year for each Prime customer, essentially losing $11 for each subscriber. Another interesting find, is that Mr. Munster also says Amazon loses an estimated $10 to $15 for each Kindle model.
At the end of the day, Amazon is still a highly profitable company and the way it caters to its customers is one if its keys to success.