Prime is conditioning Amazon's customers to consider fewer retailers when shopping online

Prime is conditioning Amazon's customers to consider fewer retailers when shopping online

Cooper Smith | April 13, 2015

(c) BI Intelligence

Amazon Prime — a membership program in which Amazon's customers pay $99 annually in exchange for free two-day shipping, access to Prime Instant Video, and other benefits — is changing the way people shop online, but not in a way that benefits Amazon's competitors.

Amazon's US customers who are a part of the Prime program consider a narrower set of retailers when shopping online than non-Prime customers, according to a study conducted by Millward Brown.

• Amazon's non-Prime customers are 12x more likely than Prime members to shop on both Amazon.com and Walmart.com during the same shopping session. Fewer than 1% of Prime members cross-shop on Amazon and Walmart websites. 
• Similarly, Non-Prime customers are also 10x more likely than Prime members to shop on both Amazon.com and Target.com during the same shopping session. 

Driving this behavior likely has to do with the fact that Prime members want to realize a greater return on that $99 initial payment they have to make in order to be a member of Prime.

This is a problem for Amazon's competitors — and not just mass merchants — because a growing share of all major retailers' shopper-base is made of Prime members. Amazon isn't the only retailer using the membership model to acquire new customers and capture a larger share of consumers' wallets; Sephora, 

Google Express, Jet, and others are experimenting with membership programs of their own.