#9 Why does Amazon include so many benefits for Prime?

Or bundling as retention strategy

Amazon Prime is a $15/month or $139/year subscription that offers free 2-day shipping, unlimited TV shows and movies, unlimited ad-free music, free games, free books, unlimited photo storage, discounts at Whole Food, and many more benefits. But why does Amazon offer all these benefits for Prime subscribers?

Prime didn't start out this way. In the beginning, Amazon Prime was a way to get free 2-day shipping for certain products on the platform. But over time, Amazon started adding more and more benefits to its subscribers.

The biggest reason is customer retention. As of 2022, there are over 200 million Prime subscribers worldwide. And these subscribers are valuable. An average Prime subscriber spends over $1,400/year on Amazon while non-subscribers only spend $600/year. Also, 90% of Prime subscribers start their product search on Amazon.com while non-subscribers do it less than 50% of the time.

Prime membership is cheap considering how many benefits it includes. Amazon can afford to give away amazing benefits to its subscribers because it helps them retain valuable customers who spend 2.5x more than non-subscribers. While the company earns $30+ billion on subscription fees, it makes even more from loyal customers who use Amazon for everything.

I learned it from this article.