Amazon.com has become a retail force thanks to diversified products, Amazon Prime memberships, outstanding customer service and guaranteed shipping. Retail customers discover the value of Amazon.com and keep coming back to the company time and again, even though some of its products may not necessarily be the least expensive among online retailers.
A study released in late January 2015 notes that Amazon Prime members spend more and shop more on the website as compared to non-members. Prime customers spend an average of $1,500 per year versus $625 annually for non-Prime members. People who have the service shop 50 percent more, and its members account for 45 percent of all Amazon.com customers. As many as 500 U.S.-based Amazon.com customers were surveyed for the report, and the authors of the study marveled at the way shoppers saw the value of Amazon.com versus other online retailers.
Amazon Prime gives shoppers free two-day shipping and free access to certain streaming music and videos. The perks of the $99 subscription outweigh potential costs in this case. Over the span of $1,500 of orders and one year of shopping, free two-day shipping pays for itself. Other online retailers may offer free shipping, but only if someone buys more than a certain amount. Amazon.com created a massive base of customer loyalty when 40 million Amazon Prime members recognized the value of its services. Even though items may be cheaper on other retail websites, receiving the items in two days instead of a week added something extra to the ordering process not found with any other retailer.
Customers who take into account the value of membership find that the products are not always about discounts at checkout. Sometimes, value comes in the form of saving time, providing a great overall customer experience and guaranteeing quality. A seemingly large upfront fee of $99 seems small compared to $1,500 per year in spending. Amazon.com responded by making some products even more valuable to repeat customers. Some products have additional discounts for Amazon Prime members, and exclusive video content comes only with a membership. The subscription service is more than just free shipping. Customers love the future incentives enough to spend $99 up front and save money later.
The value of the online retailer's services becomes even more recognizable as a place for one-stop shopping. Instead of going to one retailer to find paper towels and another to find dog food, shoppers can find both in one place. A lack of sales tax in some cases makes Amazon.com even more attractive than having items shipped, for free, to the nearest location of brick-and-mortar national retailers. Customers also get the convenience of having items delivered to their front door.
Amazon Prime shows that shoppers love bargains, convenience and free stuff. Retailers that emulate Amazon.com's model should look closely at what creates value for shoppers who are willing to spend extra money for added services.
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