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Amazon’s Prime Marketing Strategy

By now it’s safe to say that anyone who has been online has probably heard of Amazon and almost just as many have heard of Amazon Prime. Starting out as a way for customers to get 2-day shipping on all the orders many doubted that customers would be willing to pay an annual fee just for shipping.

Amazon Prime has now been in existence for 8 years and has been received by millions of customers. What many experts claimed would be a failure turned into a way for Amazon to fund many of its new distribution centers and increase brand loyalty by continuously providing a quality service.

A Quick Look at Amazon

For the last 17 years Amazon CEO Jeff Bezos and the team at Amazon have redefined the way we shop online. Founded in 1994, a time when the Internet virtually didn’t really exist, Amazon didn’t see a profit until 2001. With a revenue of $1 billion and a profit of $5 million it became clear that it was destined to be a household name. Paving the way for the new concept of online sales instead of the traditional brick and mortar or warehouse sales.

Since its inception it has expanded from a retail store to a computer services store with its cloud computing services known as Amazon Web Services (AWS). All you have to do is check the Internet for the various stories highlighting Amazon’s amazing marketing strategies and you can clearly see that these guys know what they’re doing.

Based in Seattle, Washington their mission is “to be Earth’s most customer-centric company, where customers can find and discover anything they want to buy online, and endeavors to offer its customers the lowest possible prices” and for many it’s pretty safe to say that is exactly what Amazon has achieved.

What is Amazon Prime?

Amazon Prime is an Amazon program that offers free two-day shipping on a significant number of all of Amazon’s products, Netflix-like video streaming service, as well as other perks all for a small annual fee. Amazon Prime pushes Amazon past being just a go-to site for online shopping to the only stop many online users go to. The beauty of Amazon’s marketing strategy for their Prime program is how it links its hardware, Kindle Fire tablets, with its services, Prime, Instant Video, and Kindle libraries.

But just what made Amazon Prime the member magnet that it is today? How can other businesses experience the same success that Amazon did with its Prime services? A couple of the top marketing strategies used by Amazon when marketing its Prime services are:

Treating each customer uniquely. People visit Amazon for many different reasons. Whether it’s to make a purchase, to view a video, to look for information, read reviews, and more. That’s exactly why it is valuable because different people visit the site for different reasons, and not all customers are going to be looking for the same thing.

Amazon covers this by providing a variety of different offers to the different people that look into its Prime Services. Amazon recognizes that their true investment lies within the loyalty of their customers and work to improve that trust and boost overall sales.

Taking chances. When it first introduced its Prime service many experts in the industry looked down on it. Choosing not to follow the crowd Amazon pushed forward and continuously set itself apart for years by offering a unique service and product to all its customers.

Making Money Even When It Is Free

Amazon Prime first started out offering free shipping as its main perk but has since added additional features after finding out that once members signed up they were much less likely to use other online retailers. Making Prime an essential part of Amazon. One of the best things about Amazon Prime for Amazon is that they make money even without having to charge for a subscription.

Since there are so many additional features to having an Amazon Prime account many users change their behavior developing a greater loyalty to Amazon. Being more willing to purchase things online especially if they know it’s easier to do and comes with lots of added perks like free shipping.

Slow and Steady Wins the Race

What many people don’t realize about Amazon Prime is that it has been around since 2005. Amazon went without making a profit off of Prime for many years. Early on many experts thought the program wouldn’t last but looking at the statistics today it is widely known that these early thoughts were very wrong. When it first came out Amazon played with Prime determining what should be included in the membership and during that time refined Prime’s offerings from “two-day free shipping” to:

•    Two-day free shipping
•    Unlimited access to its movies and TV shows
•    Access to over 500,000 books available to be borrowed from the Kindle Owners’ lending library.

After a slow start, Amazon Prime got a huge boost in membership when Amazon started including a 30-day trial membership when its Kindle Fire tablet in the fall of 2011. There are also trial programs for students and mothers that have also helped increase membership.

In 2012, Amazon Prime members made up around 4 percent of Amazon’s 182 million active customers but made up nearly 10 percent of purchases made on Amazon spending more than twice as much as non-Prime customers. With a history of always delivering amazing value Amazon has established itself as one of the top Internet retailers.

Prices Ideal for Everyone

While Amazon Prime’s price has gone up significantly since its arrival in 2005 it is still reasonable enough for even those with the smallest budget. At just $99 per year the price of membership is within reach of most subscribers. A great benefit to using Amazon is that if you do not use their Prime services after being charged and choose to cancel your account you can receive a refund of the membership fee you paid, no questions asked.

Providing Great Value First

In order to grow and expand a product or service must be profitable and meet the needs of its customers. Without customers there is no profit and without profit your business won’t last long. After all, a business that doesn’t have a profit for an extended period of time isn’t really a business, it’s more like a hobby. Many consumers won’t feel the need to invest any time on a service if they feel like they’re not going to get any real value out of it.

Amazon is known for the incredible value they provide to their customers. With an outstanding customer support team and a focus on quality of service and product its no wonder millions of consumers are flocking to sign up for Amazon Prime.

A Strong Foundation for A Bright Future

A direct reflection on CEO Jeff Bezos, Amazon Prime’s success is one of the standouts in Bezo’s myriad of projects. With the release of Amazon’s Fire TV and the launch of its Fire Phone, Prime fits in perfectly as an added feature rounding out Amazon’s marketing strategy.

While Amazon hasn’t disclosed just how many people have signed up for its “Amazon Prime” program there’s no doubt that a significant amount of consumers participate in this unique service. Morningstar analyst R.J. Hottovy estimates the amount of people that have a membership with the program at 10 million suggesting that Amazon Prime contributes to about a third of Amazon’s income.

Reports recently released by Morningstar predict that Amazon Prime memberships will be one of the primary methods of growth for the company for years to come. Their belief is that Amazon will be able to expand their reach more meaningfully and this is all due to Amazon Prime. Since late 2011 Prime has experienced rapid growth reaching an estimated 10 million members by the end of 2012 with an estimated 25 million members being reached by 2017 and 100 million by 2020.

Conclusion

Amazon’s main goal has always been to increase loyalty among its customers. Known to believe in spending money in order to make money Amazon Prime is the perfect example of how setting up a revolutionary marketing strategy and sticking with it can deliver trusting customers that are more than willing to spend their money on the products or services being offered by a company they believe in.

According to Deutsche Bank analyst Ross Sandler, “Prime is arguably the most valuable and important trend for Amazon.” Accounting for around 50% of Amazon’s gross merchandising volumes Prime has become one of the most important assets Amazon owns. From startups to small businesses to large corporations, every brand can learn from Amazon’s Prime marketing strategy.

How they focus on their customers, test out their marketing strategies and focus on continuously improving the way they interact with their members are all essential parts of Amazon Prime’s success. Sticking to its belief that long-term investments work better than short-term investment Amazon is an inspiration for brands everyone providing easy-to-use functionality, timely customer service, various features all over a trusted website.

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About Sean Donahoe

Sean is one of the most recognized industry leaders in business and marketing. As a popular speaker, author, consultant he has helped over 50,000 students world wide find success in their businesses and has consulted with Fortune 500 companies and businesses of every size grow and thrive...

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