79% of US Amazon Prime Users Subscribe for the Free Shipping

Free shipping the overwhelming driver for Prime subscriptions and retention

8 out of 10 US Prime subscribers in it for the free shipping. (Credit: TDG, 2018)

According to new research by The Diffusion Group (TDG), 79% of Amazon Prime users cite free shipping as the primary reason they subscribe to the service. Only 11% cite Prime Video, with a collective 10% citing Prime Music, Photos, Reading, Twitch, or other benefits.

More than half of US adult broadband users currently subscribe to Amazon Prime. When asked which of the many benefits of Prime drives their loyalty to the service, eight in ten chose free shipping of retail purchases.

"While Amazon Prime is building robust audiences in video, music, and gaming," notes Michael Greeson, TDG President and Director of Research, "Prime is first and foremost about developing more and broader retail relationships, and free shipping is key to that mission. That is where the real value of Prime lies.

Adding high-quality digital media to Prime has certainly sweetened the deal and brought many new subscribers into the mix. Once they begin to buy more merchandise, however, service value appears to shift from media to free shipping. "This is not to diminish the value that digital media services add to the Prime equation," notes Greeson, "but it puts it into perspective relative to retail."

Greeson also points out that the retail benefits of Amazon Prime serves to differentiate it from media-only competitors like Netflix and Hulu (video); Spotify and Apple (music); and Mixer, Owler, and Caffeine (gaming).

"The competitive threat that Amazon poses to the media industry is unique," argues Greeson. "Video, music, and gaming services are largely loss leaders to Amazon's cash-cow retail business. This strategy continues to enable the company to disrupt not only established media verticals but a widening array of other goods and services."

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