Consumer Intelligence Research Partners LLP (CIRP) data shows that as of Dec. 31, 2020, more than half of Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +0.51% Prime members (52%) had an annual membership, up from 49% just three months earlier.
Typically during the holidays, Amazon will see a spike in monthly Prime members as shoppers seek to take advantage of the program’s perks, such as free shipping, without making a long-term commitment.
However the most recent holiday season was different.
“Since Amazon introduced a monthly pay option, Amazon has often seen a jump in monthly memberships in the December quarter,” said Mike Levin, co-founder of CIRP, in a statement.
“For the first time in four years, the percentage of annual memberships increased in the holiday shopping quarter. In other words, in the December quarter new and renewing members took advantage of the lower annualized cost of a yearly membership, and with that made a longer commitment to Amazon Prime. These new members will be around well into 2021.”
CIRP estimates that there are 142 million Prime members in the U.S. In fourth-quarter earnings announced in Jan. 2020 , Amazon’s Chief Executive Jeff Bezos said the company had reached 150 million members with “more people [joining] Prime this quarter than ever before.”
The COVID-19 pandemic has driven many shoppers online, driving soaring e-commerce sales.
The increase in annual Prime members comes as eMarketer forecasts a continued surge in e-commerce sales around the world.
According to a January report, eMarketer estimates global e-commerce sales of $4.28 trillion in 2020, up 27.6% from 2019. Experts expect 14.3% growth in 2021 to $4.89 trillion.
“We anticipate that consumers will maintain many of their newfound digital behaviors in 2021,” said Ethan Cramer-Flood, author of eMarketer’s “Global E-Commerce Update 2021” report.
“However, with so much growth shifted forward into 2020—and with a full year of relatively normalized bricks-and-mortar commerce—2021’s growth rate will decelerate to some degree, despite the enduring enthusiasm for e-commerce.”
Still, Amazon is poised to take a hefty slice of that pie. CIRP said Amazon Prime members accounted for 68% of Amazon shoppers in the most recent quarterly earnings in Oct. 2020.
And in that quarter, Amazon set a sales record of $96.1 billion.
“After several quarters of slower growth, consumers joined Prime at a rate last seen more than four years ago,” said Josh Lowitz, CIRP co-founder, in a statement.
“CIRP estimates that 30 million additional shoppers used an Amazon Prime membership in the year, as consumers naturally flocked to the free shipping and streaming media benefits as the pandemic kept them at home.”
With more shoppers heading online to purchase goods including groceries, home furnishings and clothing, fulfillment has taken on increased importance. Amazon’s delivery options and benefits stand out for many consumers.
Target Corp. /zigman2/quotes/207799045/composite TGT -1.60% , for example, has talked up the bottom line benefits of giving customers the option to head to a store to pick up an online order, with 95% of the retailer’s online sales during the holiday season fulfilled in using a bricks-and-mortar location.
And many retailers, like Bed Bath & Beyond Inc. /zigman2/quotes/209801102/composite BBBY +0.14% , have added services like curbside pickup in recent months.
In order to compete, retail executives are turning more of their attention to the ways in which technology can keep them competitive by improving areas across the supply chain like inventory management and distribution centers.
“The pandemic has hyper-accelerated the digitization of retail. Retailers can no longer rely on brand, product and price alone,” said Omar Akilah, vice president of commerce at Blue Yonder, in a statement from its “Future of Fulfillment Research” report.
Blue Yonder is focused on the digital supply chain and multi-platform order fulfillment.
“With uncertainty still looming as we enter 2021, retail executives are needing to quickly re-orient customer-centric strategies to deliver speed and convenience.”
Amazon stock has gained 75.4% over the last year. The Amplify Online Retail ETF /zigman2/quotes/206522380/composite IBUY -3.36% has soared 129.2%. And the benchmark S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.99% is up 15.8% for the period.