Wall Street is always trying to bring pressure on Amazon about Prime Memberships. Analysts place a lot of importance on how many there are, and keep trying to get Amazon to raise the price of a membership. Since no other retailers have this kind of metric to compare to, it seems a bit random for investors to keep obsessing about this number.
But there is actually an excellent reason to do so. Prime members represent the best customers any retailer could hope for.
It is estimated that about 70% of upper income households have Prime memberships. Since Prime members are known to spend more than non-members on Amazon’s website, this is the demographic you want shopping on your website.
During the biggest shopping weekend of the year, more Prime members every year are likely to order from Amazon on Black Friday and Cyber Monday than go shopping in a physical store. In 2015, they accounted for 35% of Prime members. In 2016, it was over 40%. This is a growth trend that is expected to continue.
These percentages are important because e-commerce is only expected to grow, and nowhere is that more true than the holiday shopping period. It is believed that Amazon grabbed up to 37% of this year’s holiday weekend sales, which are believed to have totaled over $12 billion during the 5 day period from Thanksgiving Day through Cyber Monday.
Additionally, a survey from Astound Commerce revealed that a mind-boggling 43% of consumers expected to buy over half their holiday shopping from Amazon this year. Though the company doesn’t reveal the numbers, it is rumored that there are more than 60 million Amazon Prime members in the United States. They have more money, and a greater tendency to spend it.
That’s why Wall Street considers them important.