My life is on Amazon.
I would say, like, I'm super hooked on Amazon Prime.
I would definitely say for me, Amazon is number one.
How important is the Prime ecosystem to Amazon?
Well, take a look at these numbers.
Subscribers, on average, have spend nearly double that of nonmembers.
Whatever it is you need, from clothing and electronics to furniture or groceries.
Chances are you can find it on Amazon.
That expansive inventory draws millions of daily shoppers.
Amazon can offer such a wide array of products because it allows third parties to sell products on the platform right
next to items sold directly by Amazon.
Amazon sellers account for 56% of all items sold on Amazon.
Amazon owes its success to removing as much friction from the purchasing process as possible.
But it wasn't quite enough. So in 2005, Amazon introduced Amazon Prime.
Today, you can get Amazon Prime membership for $119 per year or for a $12.99
monthly subscription. Subscribers receive deep discounts, access to Amazon's video streaming service and an
invitation to Amazon Prime Day.
But perhaps the biggest draw for Amazon Prime is its free one or two day shipping.
There are nearly 200 million Prime subscribers worldwide, with 150 million U.S.
subscribers. And Amazon has been able to capture 40% of all U.S.
retail e-commerce sales in 2021.
The company today is worth about $1.6 trillion.
Here's how Amazon Prime gets you Hooked.
The average Amazon Prime member is reported to spend about four times more than non Prime members, and at
least 73% of millennials are Amazon Prime members.
But Amazon's leadership team never planned to create Prime.
In the early days, spending $25 would get you free shipping.
But the process to qualify for that free shipping was complicated until one software engineer introduced the
concept of free shipping.
Well, sort of. The plan was to have customers pay a fee once a year for endless shipping.
The idea was...
was really radical when it was pitched to the project.
I had colleagues, peers and in some cases, people more senior to me saying that it felt like a really bad idea.
Giving free shipping didn't make the spreadsheet math work.
To our surprise, this caught the eye of Jeff Bezos, who was a couple of
rungs in the ladder over me in the organization at that point and brought us together to build the Amazon Prime
product.
Ravindran says the idea became known as Project Futurama and was eventually rebranded to Amazon
Prime.
In 2005, Amazon Prime made its debut and was an instant hit.
But there's more to Amazon Prime success than free shipping.
The company employs a sophisticated array of marketing tactics to move its customers from a 30-day free trial
to a paying subscriber.
Try quitting before the 30-day trial is over, and Amazon will entice you by adding 7 more days or, in some cases,
another month. Josh Lowitz of Consumer Intelligence Research Partners says the goal is to turn
Amazon Prime into a part of their consumer's everyday lives.
You don't want to be that foolish person who is paying money for the membership you're not using.
So consciously or subconsciously you say, you know, "I ought to get this at Amazon."
Then the customer becomes a more active shopper because then they want to use what is free to them.
Experts say the company uses an array of colors, animations and slogans to push fleeting deals in front of online
shoppers.
That combination creates a sense of urgency, leading shoppers to purchase items that may have otherwise left on
the virtual shelf.
I kind of call it the pumpkin spice phenomenon.
You know, during this like limited window from like early September through late October, everything is pumpkin
flavored and everyone is rushing to get it because once November 1st hits, there's no more pumpkin on the shelves
until the next September.
So I think Amazon is really good to add to that sort of pressure point in consumers
brains.
Amazon also keeps track of users search and purchasing histories and serves targeted ads for specific
products to individual people at the right time to increase the likelihood of making a sale.
It seems Amazon knows more about its consumer spending habits than they do.
There was that article in the New York Times magazine several years ago about how Target knew that women were
pregnant before they did, and their data set is so huge and their team is so dedicated and
smart that they use that to push you to the places that you're naturally inclined to go.
It's that mix of targeted ads, extreme discounts, same day shipping and the instant gratification of one click
purchasing that encourages even more spending.
Don't have me have to stand in line and do to checkout.
Just start sending me stuff that I've already selected.
That's a very powerful technology.
And in fact, when Amazon patented that technology, many other retailers complained, in part because it's such
amazing technology that it creates far fewer challenges for customers who want to be able to move quickly to
actually enjoying the product rather than having to wait around and buy the product.
And Amazon seamlessly transitioned its tech to smartphones, adding to the ease of shopping on Amazon Prime.
But none of this comes without controversy.
Some say Amazon's easy to use platform encourages impulse purchases.
I think you still really need to take a step back and ask yourself, "Well, if this item.
You know, if it weren't going on sale, would I be buying it?"
And if the answer is no, then I think you may need to reconsider.
Well, is this really worth my money?
Is, do I really need it?
To avoid the temptation of impulse shopping, some people simply avoid Amazon Prime altogether because they know how
potent its hyper targeted marketing can be.
I started to become more conscious of the things that I was purchasing.
So I avoid places like H&M, Zara, Forever 21 and Amazon just kind of seem like
the next logical step to it.
But during the COVID pandemic, Amazon became a sort of lifeline for essentials during the shutdown.
I don't have to worry about going to pick something up.
Like, I just... I think I'm out of that phase now where it's like, I have to go to the store and pick something up and I
rather just come to me.
I already know what I ordered and it's exactly what I wanted.
And I think the safety aspect during COVID was also a big push for a lot of people to, like, start
getting their groceries delivered all the time.
And while the pandemic wreaked havoc on brick and mortar retail, Amazon's value increased to $1.6 trillion.
But for all of Amazon Prime's success, the company has faced lawsuits alleging unfair business practices ranging from
undercutting its competitors to stealing the intellectual property from the small businesses that sell on its
platforms.
One of the things we know it does is that it will spy on the best selling products of
small businesses on its site.
It will then copy those products, create its own versions and then get its versions top billing in the search
results. So basically, it's mining all the good ideas and innovations of these small companies, copying it and using
it for its own advantage. And a small company can't protect itself because it has to be on Amazon.
Amazon is facing pressure from its own employees, activist groups, lawmakers and regulators on a number of fronts.
Amazon's treatment of third party sellers is attracting antitrust scrutiny in the U.S.
and in Europe. As the company develops more private label products, there are concerns that it could be using that
data of its merchants to unfairly compete against them.
Amazon has also faced backlash for its mistreatment of warehouse workers, prompting some to boycott Amazon
altogether.
And workers have talked about having too few bathroom breaks, excessive productivity goals, intrusive monitoring
and unsafe working conditions.
I don't agree with a lot of the ethics that I've read or seen, like with some of the scandals, with the, like, how
warehouse workers are treated.
And it's not so much I'm anti-Bezos, but just anti-workforce treatment.
I feel like the least that I could do is to at least try to purchase goods from other
resources.
Amazon is now the second largest retailer in the world, behind Chinese giant Alibaba.
From June 2020 to June 2021, shoppers spent $610 billion on Amazon.
Amazon recently began offering pharmaceuticals and is even getting into the world of high fashion.
Well, I think you see today that there's no product category that Amazon can't enter into,
and so we see it with groceries, we see it with physical retail, with the recent announcement that they're opening
department stores.
When Jeff Bezos was the CEO, he repeatedly said that the concept of providing
large amounts of selection at low prices delivered quickly to customers.
That's a concept that works well all over the world.