Amazon.com Inc (AMZN)

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Amazon Prime Added Just 2 Million New Subscribers in Q1
By: 24/7 Wall St. | April 17, 2019

Subscriber growth for its Amazon Prime service continues to slow down for Amazon.com Inc. (NASDAQ: AMZN). The number of U.S. Prime subscriptions rose by 2 million in the quarter, from 101 million in the fourth quarter of 2018 to 103 million. Compared to the first quarter of 2018 when Prime had 93million subscribers, year-over-year subscriber numbers rose by 11%.

Between March of 2917 and March of 2018, Amazon Prime subscription growth totaled 16% Nearly two-thirds (64%) of trial subscribers converted to paid memberships in the first quarter while 93% of one-year subscribers renewed for another year. Nearly all (98%) of two-year subscribers renewed their subscriptions.

The data was reported Wednesday by Consumer Intelligence Research Partners (CIRP). The firm also noted that Prime members continue to spend an average of $1,400 a year with Amazon compared to about $600 in annual spending by non-Prime members. In 2017, a Prime member spent an annual average of about $1,300 while non-Prime members spent about $800.

CIRP co-founder Josh Lowitz noted:

Amazon Prime has showed signs of slowing growth in the US and this quarter confirms this. In particular, year-over-year growth has flattened. After the holidays, the March quarter is typically slow, and this one was worse than past ones.

Co-founder Mike Levin added:

Conversion and retention rates help explain why US Prime membership growth has flattened. Retention after a year has always been high, and at over 95% after two years has been the envy of any company that sells memberships of any sort. Bur, conversion from a 30-day free trial has declined, from over 75% at its height to under 65% today.

What this indicates is that Amazon has pretty well saturated the market among Americans who are likely to benefit the most from a Prime membership. That means trial memberships are less likely to convert to paying memberships. CIRP’s Levin also notes that giving members the option to pay monthly for a membership “makes it even easier to let a trial membership lapse.”

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