Amazon has been successful in keeping its prime business model as it has been a way to maintain the momentum of the e-commerce company. The idea of keeping customers loyal to the firm is a strategy that rivals want to emulate.
Amazon has worked with various international companies to ensure an excellent customer experience with the Prime program. Read on to find out more information about Amazon prime business model.
Table Of Contents
What Is Amazon Prime Business Model?
Amazon Prime is the name of Amazon’s subscription-based service. Members enjoy free-two day shipping on eligible items, unlimited streaming of over 100,000 movies and TV shows through premium video, access to Kindle Lending Library, and more. Amazon Prime has become a staple in many households because it offers customer convenience and value.
It is incredibly effective to attract new customers to Amazon’s platform. Amazon Prime's model is based on a subscription service that provides customers with various benefits. The benefits package encourages repeat business by providing value at no cost. It also includes revenue streams for Amazon by allowing them additional ways to charge for their products or services.
What Is Amazon Prime Business Strategy?
Amazon, as an online shopping service and digital shopping service, has a business strategy to help Amazon retain its customer base through the following ways.
- Subscriptions – Amazon Prime uses subscriptions to get customers to buy from Amazon and other online retailers. The ability of the customers to subscribe require only a one-time payment which gives them access to the many Amazon Prime benefits. As an Amazon Prime member, you should have the subscription as a monthly service. The subscription service is available for purchase as a one-off or yearly subscription.
- Marginal Costs – Due to the favorable Amazon price offerings on goods, the company has been able to put extra charges on goods. The additional demands on Amazon products have enabled Amazon to grow its sales due to the Prime program.
- Fast delivery time – Amazon is the best e-commerce platform due to its prompt delivery. The Prime program of fast delivery gives Amazon an advantage over most of its competitors. Amazon can sell other retailers' products at a discount, making it the best option for sale even to other retailers. With its strong brand position, Amazon has a loyal customer base. This puts Amazon in a position of being the best player in the market.
- Waiving off Shipping charges – The Amazon Prime program ensures members receive free and fast delivery on specific products. Amazon express delivery also provides that their customers escape state taxes. For this reason, many online shoppers prefer shopping on Amazon due to its favorable charges and less stressful shipping strategy.
Amazon Prime Offerings
The Amazon Prime program offers free two-day shipping and same-day delivery on orders with eligible codes. In some areas, Prime members can enjoy 2-hour delivery. Amazon Prime members can also access goods like electronics and phones on the same day of brand release. It allows customers to choose a standard weekly delivery day irrespective of their order.
The Amazon Prime program offers an exclusive discount on orders. The order's location determines the discount charge. Stores that receive discount charges include Whole Foods Market, Book Stires, and more. Discounts are on certain Visa cards, Prime Pantry, Amazon Wardrobe, and Amazon Fresh. You also have 30-minute early access to lighting deals as a prime member.
Amazon Prime offers unlimited TV episodes and movies streaming instantly on any device without a cable connection. There is also access to free unlimited music that is ad-free. Prime gaming is also available, and prime members can enjoy the in-game content, free channels, and free subscription to other games.
Some of the reading benefits for Prime members include borrowing books and magazines from the catalog and reading them on a Fire tablet or Kindle reading app. Amazon provides Amazon First Reads as a program to US residents, which has a free download.
Amazon has also ensured members can share these benefits through a Membership Sharing Program. The sharing program provides that a member shares the Prime gift with a non-member in the house.
How Does Amazon's Prime Business Model Make Money?
Amazon offers digital content and has been able to earn revenue through SVOD, TVOD, and AVOD models. Video on Demand is a subscription service for Prime members, enabling them to access streaming videos continuously. Transaction Video on Demand allows Prime users to pre-order video streams anytime. With these video orders from Prime members, Amazon can generate revenue.
Another way that Amazon Prime makes money is through Amazon Reading. Subscribers can buy books with an automatically signed-up subscription. The reading benefit also comes with the reading platform, Kindle Fire. The Kindle Fire allows authors and publishers to interact with readers and, in return, pay sales commissions and delivery fees.
Another income source for Amazon is Amazon Channels. You can watch shows and movies aired on the Amazon channels on the ABC Television Network. These Prime channels are installed with Instant Videos as the Content Library. Besides digital content, Amazon makes money by selling clothes, shoes, electronics, lighting, and many others.
Prime members can buy these Amazon goods. Amazon, a retail store, can access goods from various wholesalers at a lower price. Amazon, in turn, sells these products to its consumers worldwide, generating income.
How Successful Is Amazon's Prime Business Model?
The Amazon program has earned a large base of existing members and subscribers. For example, Apple has been gaining subscribers through apps and services, increasing exponentially. The Prime Program has contributed to the success of Amazon as a parent company. With the most extensive entertainment library, Amazon has millions of movies and songs available to all its consumers.
Amazon's Prime business model has proven effective in the ever-changing world of economics. Amazon is a global brand and has acquired status through its widespread recognition, which is a major contributing factor to its success. For example, Amazon has thousands of customers through its five membership plans, which entail monthly payments.
Customers shop with Amazon due to its low prices, accessibility, and various products. Customers can also fulfill their shopping needs on the go because they can access their preferred orders from anywhere using their phones.