Are prime memberships all Amazon needs to outdo its competition?

Amazon’s Prime membership programme is doing well in India. The number of memberships has increased since its introduction last year. The etailer now intends to make the best use of its Prime customer’s loyalty to boost sales through repeat purchases and out do its ecommerce rival, Flipkart.

Prime purchase stats

Amazon Prime is paying off because in the platform’s top 3 categories – living room, home and kitchen products; consumables; apparel, Prime member purchases are surging.

According to the company,

  • One-third of all Amazon India orders are made through Prime accounts
  • Two out of three daily essential purchases on Amazon Pantry are by Prime members
  • In fashion, the second highest selling category on Amazon, one in three orders are placed by Prime customers

Amazon Prime beneficial for the long run, say experts

Analysts feel that this loyalty programme by Amazon will aid it in the long run. They also claim it may throw Flipkart off is game as it plans to enter the online grocery and fast moving consumer goods section.

The founder of Wazir Advisors, a management consulting firm, Harminder Sahni said, “People will stick to a single online marketplace with or without incentives in the long run and Prime is making an impact in this scenario.”

He further added, “Initially, consumer behaviour is to compare products across marketplaces but if the price is right and given that users have paid for the Prime subscription, it bet comes a default choice, as delivery charges are, waived off for Prime members. However, the share of FMCG or grocery online in India is very small and how consumer behaviour pans out in the long term remains to be seen.”

Prime’s scope is in FMCG and personal care?

By 2020, the beauty and personal care segments are estimated to grow threefold, a Google-AT Kearney report on online retail revealed. This is because FMCG and personal care are displaying speedy growth in ecommerce.

Last year, India’s online grocery market was the fifth largest in the Asia-Pacific region. Data by Euromonitor shows that Indian online grocery increased by 44% in 2016 from 2014. This kind of growth is expected to continue for the next five years.

The Prime member programme has helped Amazon attract more customers to its FMCG segment. As a result, it has grown by 150% year-on-year during the January quarter.

“Prime customers are a lot more loyal and shop more. In Pantry, every box you make of 15 kg, Rs 20 is the box fee. To Prime customers we don’t charge anything on the box…The use cases for Prime customers is very high in FMCG, it makes the use case of Prime very strong because you shop so often,” Amazon’s director of consumable FMCG, Saurabh Srivastava mentioned.

The products available to Prime members are the same as those on other marketplaces, but it’s the privileges that Amazon Prime provides that make the marketplace stand out to customers.

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