Amazon Prime continues to drive rapid growth

RetailWire panelists recently discussed the rapid growth of membership in the Amazon Prime program, despite the recent increase in annual membership. Here’s my take on this brilliant strategy:

The growth and penetration of the Amazon Prime program is astonishing, considering that many analysts were skeptical that Amazon could follow the Costco “membership fee” model only a few years ago. The program has created a loyalty firewall around the overall Amazon business, since Prime members receive an array of benefits from music streaming to free (and fast) delivery.

Fee revenue also provides Amazon with some incremental profit considering its overall strategy is to gain share at the expense of margins. This allows Amazon to keep building out its infrastructure and to achieve a market dominance rare in the recent history of retail. Nobody is impregnable (see Sears and Walmart as recent examples), but Amazon is building a huge moat around its business.

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