Amazon Prime Has More Than 100 Million Members -- 3rd Update
April 18 2018 - 8:07PM
Dow Jones News
By Austen Hufford
More than 100 million people globally are now paying for Amazon
Prime, a sign of how Amazon.com Inc. has used the service to evolve
from an online marketplace that struggled with profitability into
an e-commerce powerhouse.
Amazon, which has never disclosed the number of Prime members
before, revealed the figure Wednesday in Chief Executive Jeff
Bezos's closely followed annual letter to shareholders. The company
said in late 2015 that it had "tens of millions" of Prime
customers.
Amazon's story to investors has largely been one of scale. In
the company's view, having a large numbers of customers and clients
has allowed it to spread costs broadly and continue investing in
technology.
This view is shown in its growing Prime membership, through its
massive cloud-server business and how it lets third-party sellers
onto its platform to compete against itself for customers. Amazon
said Wednesday that a majority of goods shipped world-wide on its
platform are now from these sellers.
"This is Bezos saying Prime continues to be a healthy, growing
platform, " said Michael Levin, partner and co-founder of
investment and market-research group Consumer Intelligence Research
Partners LLC. "Bezos is basically saying 'Here's our install base,
come and get us.'"
Launched 13 years ago, the $99-a-year Prime service gives
customers free, unlimited two-day shipping, access to free music
and videos, and other perks.
Colin Sebastian, a Robert W. Baird & Co. analyst, said
Amazon's disclosure on its Prime member count was "in-line to
slightly above expectations."
Mr. Sebastian had estimated the figure was close to 100 million
after Amazon reported its fourth-quarter earnings report in early
February.
Last year Amazon brought in $9.72 billion in revenue directly
from subscription services, including fees from Prime members. The
company also benefits from Prime members who tend to spend more
money on Amazon than nonmembers and do so more frequently.
Mr. Levin's firm estimates Prime members in the U.S. spend
$1,300 a year with Amazon, while non-Prime members spend about
$700.
The letter also said more new members joined Prime last year
than in any previous year. Amazon has been expanding Prime
internationally, including to Mexico, Singapore and the Netherlands
in 2017.
Shares, up 31% so far this year, rose 1.8% in after-hours
trading to $1,556.
Amazon separately said that Mr. Bezos was paid about $1.7
million in 2017, which was 59 times the median pay for an Amazon
employee. The company disclosed the pay ratio in a securities
filing as part of a broader requirement of the postcrisis
Dodd-Frank law that went into effect this year. Much of Mr. Bezos's
total compensation, which was flat from 2015 and 2016 levels, came
from costs related to his personal security.
Amazon's median salary of $28,446 is significantly less than
some of its technology peers as the company increasingly hires
warehouse workers to grow its intensive logistics operation. Those
workers are typically paid less than high-skilled technology
workers who are commonplace at the company's Seattle
headquarters.
The median pay last year for employees of Facebook Inc. topped
$240,000 and was over $160,000 at Twitter Inc., the companies said
in recent securities filings. Companies were given some discretion
to calculate the median figure, and many have excluded contract
workers or people working outside the U.S., for example.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
April 18, 2018 19:52 ET (23:52 GMT)
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