The Amazon Prime Phenomenon

At the beginning of this year, Jason Calacanis wrote an article entitled “The Cult of Amazon Prime,” in which he rather provocatively speculated that Amazon Prime (the $79-a-year service from Amazon that offers members free two-day shipping, amongst other benefits) could be accessible to one-in-three Americans in four years. Now, I’ve been an Amazon Prime member since year one (2005), and I can tell you that it’s the greatest loyalty lock-in scheme I’ve ever encountered. So part of me wanted to believe Calacanis when he speculated that “[Amazon] Prime will reach 30M-40M of the 120M households in the United States in the next four years (with ~20M accounts).”

The other part of me, however, is a market researcher. It’s tempting when we talk to people at parties–with whom we often share psychographic/demographic traits–to think that everyone must use Amazon Prime. After all, everyone I know does, right? Well, here’s the greatest thing about my job: we get to actually ask these questions, discovering things heretofore suspected but ultimately unknown.

This year, in our annual Edison Research/Arbitron Internet and Multimedia Research Series (our 20th installment!) we threw in a few questions about Amazon, and it gives me great pleasure to share with you that I was wrong. I thought Calacanis was overstating the case: Amazon Prime may be popular in certain circles (exaggerating its importance within those circles) but surely wasn’t approaching the kind of numbers he hinted at.

Here’s what a nationally representative sample of Americans 12+ had to say:

Amazon Prime Membership

Now, I hope you are not the kind of person who would look at this graph and say “Only 8%? That’s not so big.” Actually, I think 8% is a ginormous number. To be clear, what the data tells us here is that over 20 million Americans 12+ say they have access to Amazon Prime–that doesn’t mean 20 million accounts, since a multiple-person household can and often does share one account.

With over 20 million Americans reporting access to Amazon Prime in early 2012, however, the Calacanis prediction of 30-40M by 2016 doesn’t seem so farfetched, does it?. Indeed, what Amazon has shown over the past several years is their willingness to tweak the offering (Prime membership now entitles users to a back catalog of free streaming movies) to continue to add value without disturbing the price. And if you invited all those Prime members to a Calacanis cocktail party, you’d have a country that nearly cracks the top 50 in terms of world population.

That’s a heck of a party.

How the study was conducted

A total of 2,020 persons were interviewed to investigate Americans’ use of digital platforms and new media. From January 20 to February 19, 2012, telephone interviews were conducted with respondents age 12 and older chosen at random from a national sample of Arbitron’s Fall 2011 survey diarykeepers and through random digit dialing (RDD) sampling in geographic areas where Arbitron diarykeepers were not available for the survey. Diarykeepers represent 45% of the completed interviews and RDD sampled respondents represent 55% of the completed interviews. The study includes a total of 500 cell phone interviews.

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