Subscription Case – Amazon Prime

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By Niels Vestergaard

I’ve been waiting to write this article for a long time, because, well – this is the big one!

I know, I know, Netflix still has more subscribers than Amazon, but there are several reasons to talk about Amazon Prime, especially since they started acquiring all sorts of different subscription services and it seems that Amazon is putting together their master plan for the subscription of the future. But let’s come back to that.

Originally, as you might already know, Amazon Prime was ‘just’ a Green-Fee subscription, giving subscribers access to free freight and same-day-delivery from Amazon’s website. Since then, the audiobook service Audible and the Prime Video streaming service has become part of the subscription offer. Safe to say that you get a whole lot of benefits from being a Prime subscriber today.

However, it seems this is only the beginning. In recent months, Amazon has acquired the medicine subscription OneMedical, offering supplements and medicine as a subscription. This means that Amazon is officially part of the relatively new ‘Health-as-a-Service’ space.

But it doesn’t stop there, because shortly after buying OneMedical, Amazon acquired iRobot, well-known for their Roomba vacuum that takes away one more chore from your day.

What is the reason for all these acquisitions? Is there a master plan for Amazon Prime.

Amazon Prime could be the world’s first ‘Life-as-a-Service’ provider

In the subscription economy, many of us have jokingly referenced the ultimate future, where industries will consolidate and we will see complete subscription services dubbed ‘Life-as-a-Service’, where most of our consumption will be delivered to our door. The ultimate convenience solution. For some, this might sound dystopic, but nonetheless, there are many signs that Amazon actually aims to become the ‘subscription of your life’.

In the US, the Prime membership covers a large part of your consumption. Retail products of all categories, meal boxes, streaming, audiobooks, gaming and cloud-services for family pictures and videos. All of it at a very competitive price and with lightning-fast delivery. In addition, you can control your smart home and order new products through the Amazon Echo voice recognition software. Furthermore, Amazon is currently rolling out their very own fleet of autonomous vehicles, making it tempting to let Amazon handle your transportation as well.

And now, Amazon is telling us that they are ready to deliver your medicine and fix the cleaning of your home with ‘Cleaning-as-a-Service’. The acquisition of iRobot also entails knowledge about other technologies that will be part of our future homes – and with this acquisition, Amazon is moving far ahead of competitors Google and Apple.

The infrastructure is in place

Amazon is well-known for their unique network of delivery solutions and extremely tight infrastructure, allowing them to move into new markets at staggering speed. And the infrastructure consisting of trucks, bikes, cars, planes and ships is soon to be complemented by drones. Amazon can even drop off a package inside your home when you’re not home.

If you’re running a subscription business, you know that infrastructure is a huge part of your operations. Not just in regards of delivery, but also in payments and retention of subscribers. And Amazon has invested heavily in infrastructure over the last 10 years. And now, they are reaping the benefits.

With infrastructure in place, Amazon can (easily) keep acquiring services in order to steadily and indefinitely improve their own. And this is what makes Amazon the one candidate, able to realize the possibility of ‘Life-as-a-Service’. It won’t take long before you can collect all of your consumption at Amazon and essentially, never buy from anyone else.

Prime subscribers are some of the most loyal in the world

Like I said, Amazon Prime is ‘just’ a Green-Fee subscription. And there are many benefits of offering your customers such a solution. It turns out that consumers are extremely motivated to use your service when they are already invested. For a small, monthly fee you get access to free shipping and unique benefits. And when you’ve already paid a small amount to get access, you will have to make the most of it!

A report from Wundermann Thompson states that American Prime subscribers do 55% of their online shopping with Amazon. Furthermore, 71% of the subscribers starts their product search on the Amazon website and a staggering 78% of Prime subscribers use their Amazon Echo to order new products! Something seems that Prime subscribers are more than ready to let Amazon cover even more of their consumption.

The question naturally becomes: Is there anyone out there to challenge Amazon on this position? Even though Apple and Google is known for being challengers of Amazon, their business models are nowhere near the one of Amazon Prime. So perhaps Amazon is ready to position themselves as the world’s first ‘Life-as-a-Service’ subscription.