Amazon has been witnessing immense growth on an international scale, led primarily by the e-commerce giant’s subscription-based Prime delivery service. It is one of the best packages for gaining free two-day delivery, Kindle and Prime Video subscription clubbed under a single roof. But, the company has been quite silent about the growth figures of their subscription service until today.
After detailing its Q4 earnings last week, the e-commerce giant filed the 10-K form with the U.S Securities and Exchange Commission. It has now been spotted by Wall Street analysts and there is a completely new metric which seems to have grabbed everyone’s attention. The same category has been titled ‘retail subscription services’ and reported massive sales of nearly $6.4 billion. And the only subscription service that Amazon currently runs is Prime (damn!).
This is the first time such a category has popped up in one of Amazon’s official regulatory filings. This situation is similar to that time when Amazon lifted the veil from its cloud infrastructure earnings and amazed everybody. Now, the said cloud business is one of the prominent sources of income for the company — as it used by a full load of enterprises, startups, SMBs, and developers.
The new Prime retail category has mustered a lot of interest as it includes, as the filing states, the “annual and monthly fees associated with Amazon Prime membership, as well as audiobook, e-book, digital video, digital music, and other subscription services”. Now, the task for analysts is to break down the hefty revenue figure to account for the number of Prime subscribers worldwide.
This task has been undertaken by Morgan Stanley’s Brian Nowak, who estimates that the average price paid for Amazon Prime comes to be around $88. And more than 90 percent of sales for the ”retail subscription services” category would contribute towards Prime. Thus, it is most likely safe to say that Amazon Prime is currently being used by over 65 million subscribers. Once could further dilute this number to ~70 million if we take into account the affordability of the Prime service in Asia.
Further, continuing to expand on the same, the blog post says,
This also ties to AMZN’s comments made about Prime sub growth over the past couple years. For perspective, our latest AlphaWise survey showed there were 72mn total paying and free Prime subs, so 65mn paying (meaning ~10% free trials) in our view validates previous assumptions
Over the past year, Prime has become one of the major components for the growth of Amazon’s e-commerce platform. The subscription has led users to spend about 4.6 times more than usual non-Prime users, says a research. With its far-reaching grips, originating in the U.S. and expanding across oceans and borders, Amazon has become like the poster boy for online shopping.