Amazon has historically been silent about the number of customers subscribing to its Prime service, but Morningstar just released a report estimating that the company’s member numbers have hit 10 million.
Amazon’s Prime program offers free two-day shipping for books, as well as streaming video of television shows and movies and other benefits. While program had slow, questionable growth at first, it grew exponentially once Amazon decided to tie a free 30-day trial to Prime with the purchase of a Kindle Fire.
According to the Morningstar report (you can see a summary at Business Insider), Amazon breaks even on the free shipping and other extra it provides to subscribers, and subscribers spend an average of $1,224 a year — versus $505 for non-Prime Amazon customers. Morningstar claims that $78 of the $79/year subscription price is pure profit, making Amazon’s net revenue from its subscription offering approximately $780 million. (This number may be inflated as Amazon also recently added a monthly subscription plan to Prime.)
Most subscription sites don’t see these sort of revenue numbers. While it’s easy to attribute Amazon’s success to its size, it would be more accurate to say that its because the company was savvy enough to tie its hardware products to a voluntary subscription service. Trying to force subscriptions (as Microsoft and Adobe are now doing) is questionable, but upselling subscription services that enhance engagement with a previous one-off purchase is much smarter.