- Loyalty program is gaining traction overseas, signaling growth
- Members pay for quick delivery, movie and music streaming
Amazon.com Inc. Chief Executive Officer Jeff Bezos said the e-commerce giant has exceeded 100 million paid Prime subscribers and will continue to invest to meet “ever-rising” customer expectations.
Bezos noted the milestone in his annual shareholder letter, published Wednesday. The letter is the founder’s opportunity to underline his long-term strategy for investors, seeking to bolster their confidence as he continues to plow Amazon’s money into expanding internationally, building a brick-and-mortar presence, and inventing new products like Echo speakers and the Alexa voice-activated digital assistant.
Prime subscribers pay monthly or annual fees in exchange for quick delivery of online orders, music and video streaming and free online photo storage. The memberships encourage consumers to shop more with Amazon to get their money’s worth, similar to warehouse clubs like Costco Wholesale Corp. Amazon took its memberships a step further with additional digital perks, and sells add-ons like a more robust music catalog for an additional monthly fee.
Amazon has kept its Prime subscriber number a closely held secret, forcing analysts to estimate the figure based on shopper surveys. Bezos’s comments show that Seattle-based company is selling Prime memberships overseas, demonstrating it can replicate its U.S. success abroad, said RJ Hottovy, an analyst at Morningstar Inc. Amazon is losing money with its international expansion, but investors will be patient if the company is gaining Prime subscribers, he said.
“What we’re seeing in Europe and other markets is similar to what we saw in the U.S. between 2010 and 2014,” Hottovy said. “People see value in Prime memberships in terms of shipping speed and content. It’s important to investors because membership retention rates are north of 90 percent.”
Bezos cited Amazon’s continued high marks from independent surveys, including the American Customer Satisfaction Index, as proof that the company continues to invent new ways to please customers, giving them…