Amazon (NASDAQ:AMZN) is taking a significant step to change how its Prime services are shared. Historically, users often shared their Prime benefits, including free shipping, with others. However, Amazon is discontinuing this sharing practice starting October 1. The alteration aims to encourage more individuals to become direct Prime members by offering discounted full membership options. This move reflects Amazon’s strategy to maintain and expand its subscriber base in a competitive market.
In earlier years, it has been reported that Amazon’s Prime membership has shown diverse subscriber numbers, yet recent data estimates around 197 million U.S. users, as noted by Consumer Intelligence Research Partners (CIRP). Despite this large user base, an undisclosed number includes non-paying users accessing services indirectly. This shift mirrors actions taken by other companies such as Netflix (NASDAQ:NFLX), which have cracked down on password sharing to bolster their membership numbers.
What Are the Changes to Prime Membership?
Amazon is phasing out its Prime Invitee Program, which allowed individuals to share membership perks without a fee. To attract these users as paying members, Amazon will offer an introductory annual Prime membership at $14.99 for former program members. This change reflects Amazon’s objective of converting informal users into paying ones to enhance its business model.
How Will This Affect Consumer Behavior?
This decision could impact customer habits as more people might choose to pay for their own memberships rather than relying on shared benefits. According to Josh Lowitz at CIRP, the number of nonpaying users enjoying Prime benefits is substantial, representing a potential market for paid memberships.
“They need you to own your membership to realize the value of their investment,” Lowitz explained.
Recent PYMNTS Intelligence research indicates consumers increasingly savvy with subscriptions, including Amazon Prime and Walmart+. Consumers often employ these subscriptions strategically to maximize benefits such as fast shipping, exclusive discounts, and various additional services. Such behaviors underline a trend of cost-saving strategies through diverse membership engagement.
The growing tendency for consumers to subscribe to multiple services like Walmart+ and Amazon Prime nearly doubled since 2021. This increased engagement shows a shift in consumer habits towards maximizing benefits from multiple platforms.
“This trend underscores a proactive consumer desire to compare prices across platforms,” stated PYMNTS.
Such dynamics underscore evolving consumer strategies toward leveraging subscription services effectively.
Amazon’s initiative to require individual Prime subscriptions can potentially enhance revenue while reshaping customer interactions with its services. The transition challenges the traditional way users have accessed Prime benefits and poses an opportunity for Amazon to streamline membership use.
