Amazon.com, Inc. (NASDAQ:AMZN) Amazon Prime is about to debut its one and two hour delivery program in cities across the U.S. The move by Amazon Prime is starting to crowd out its online competitors like Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT).
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Amazon Prime narrows the search of buyers to around 25,000 products. People who take the subscription to Amazon Prime also get a large amount of other perks like free delivery and delivery in one day.
According to Millward Brown Digital, a market research consultancy, less than 1% if Prime members consider other retail sites during the same session. This is an extremely low member signifying that people using Amazon Prime are not likely to check other retailers for products. However, a shopper without a Prime membership is eight times more likely than a Prime member to switch to other retailing websites.
Amazon.com, Inc. (NASDAQ:AMZN) has not revealed how many Americans have subscribed to Amazon Prime. However, a recent survey by Consumer Intelligence Research Partners estimates around 40 million subscribers.
A Millward Brown Digital study showed that the number of Amazon.com traffic from Amazon Prime increased 300% in the last year. That means that a growing number of users visiting other websites are Prime members also.
Prime member are typically bigger spenders than average online shopper. Prime members on an average spend about $1500 per year on Amazon, while a non-Prime user spends around $625 a year on Amazon.com.
The conversion rate for Prime users is very high. 63% of Prime users carry out a transaction in the same visit, according to Millward Brown, this is about five times that of Amazon .com. The conversion rate for Target is 2%, and that of Walmart is around 5%. Therefore, it can be seen that there is a huge mismatch in the conversion rates for various online retailers.
Target recently revealed the plan to invest $1 billion in technology to overhaul its digital channel. Wal-Mart Stores, Inc. (NYSE:WMT) will invest $1.5 billion into its e-commerce business this year.
