Amazon Prime Membership At Record High, Exceeds 100 Million

Per a recently published letter by Jeff Bezos, Amazon (NASDAQ:AMZN) Prime’s number of paid subscribers is growing. This attests to the fact the company is successfully bolstering its presence in the world.

The letter reveals that Prime — since its inception in 2005 — has crossed over 100 million of paid members across the world.

Amazon’s strong focus toward enhancing Prime service with the help of exciting discounts, free deliveries within a short period of time, expanding movies and video portfolio and many more have helped the company achieve this feat.

We believe the company’s continuous efforts in making Prime more customer friendly will continue to drive subscription base of the service which will improve the top line further.

Post the declaration by Bezos, share price of the company rose 1.9% in the after-hours trade on Wednesday.

Coming to the price performance, shares of Amazon have returned 69.4% over a year, outperforming the industry’s rally of 38.4%.

Interesting Numbers to Look At

Last year, the company witnessed five billion of item shipment via Prime services across the world.

The company also announced that more paid members joined Prime in 2017 than any previous year — both worldwide and in the United States.

According to Consumer Intelligence Research Partners, at present Amazon has 90 million Prime members in the United States alone who spend about $1,300 on average per year compared with only $700 for non-Prime customers.

Further, per the Morgan Stanley (NYSE:MS) estimates, Prime subscribers will account for 51% of the United States population in 2018, up 45% from 2017.

The above mentioned numbers show the rapid momentum gain in Prime membership.

Prime Gaining Traction

The solid loyalty system in Prime, Amazon’s FBA strategy and content addition continue to boost Prime subscriber base.

Recently, the company started offering two-hour delivery from Whole Foods stores to Prime members in four cities — Austin, Dallas, Cincinnati and Virginia Beach. Los Angeles is the latest addition to the list.

Amazon also offers 5% cash back benefit to prime members who use Amazon Prime Rewards Visa card while shopping at any Whole Foods store.

Further, Prime members in the United States have started receiving unlimited free two-day shipping on over 100 million different items.

The company is also transforming its Prime Pantry to a subscription-based model which will boost the Prime Pantry subscriber base.

Additionally, Amazon is continuously putting efforts on expanding its Prime business globally. Last year, Prime was launched in the Netherlands and Luxembourg and added facility for customers in Belgium to join Prime and shop in Dutch. The company also introduced Prime in Singapore.

Recently, the company has also launched Prime Music service in India by partnering with eight national and over 300 regional record labels

The company continues to provide new offers to Prime members, which has been a major driver behind the rapid adoption.

Video Streaming Holds a Promise

Amazon has been focused on building video content primarily for Prime subscriber.

Per the latest report from Markets and Markets, the video streaming market is expected to grow at a CAGR of 18.2% between 2017 and 2022 to reach $7.5 billion by 2022.

Last year, Amazon reportedly spent $4.5 billion on content. JPMorgan (NYSE:JPM) estimates the company to spend $5 billion this year. Notably, Amazon is working on improving its regional content portfolio.

With the launch of original content like Breathe in India, the company recorded stupendous success. Reportedly, Amazon is also developing a TV series based on The Lord of the Rings novel.

We believe Amazon’s efforts to expand its video and content portfolio and its low-cost strategy are aimed at attracting customers to the platform from all over the world. Moreover, these efforts have strengthened its competitive position against Netflix (NASDAQ:NFLX) in the video streaming market.

Zacks Rank & Other Stocks to Consider

Currently, Amazon sports a Zacks Rank #1 (Strong Buy).

Investors interested in the broader technology sector can consider some other top-ranked stocks like Paycom Software (NYSE:PAYC) , Twitter (NYSE:TWTR) and Stamps.com (NASDAQ:STMP) . All the three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Paycom Software, Twitter and Stamps.com is currently pegged at 24.27%, 21.5% and 15%, respectively.

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