Amazon's new monthly Prime plan will succeed for this one reason
BI Intelligence
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Amazon has officially made Prime available on a monthly basis, and that strategy should take off for one major reason.
Prime, previously available for $99 per year, is now available for $10.99 per month. The monthly price is slightly higher, but it provides a new degree of flexibility for consumers who were unwilling or hesitating to commit to an annual membership.
Furthermore, customers can now take strategic advantage of Amazon Prime's free two-day shipping. Those who would only use Prime for birthdays, anniversaries, holidays, or other special occassions can now do so without needing to shell out $99 for a year-long membership they would only utilize a handful of times.
The monthly membership provides the same benefits as the annual one, so the monthly subscribers would not lose out on any perks. And the free two-day shipping is the main selling point for most Prime members anyway, according to data from RBC Capital Markets.
Furthermore, Amazon is debuting a monthly subscription for Prime Video, its music and video streaming service, at $8.99 per month.
Amazon is trying new approaches to draw in more customers as the world of e-commerce continues to transform. The rise of online and mobile shopping has given consumers more choice, flexibility, and often better service, and retailers such as Amazon are shifting their strategies to keep up.
Cooper Smith, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on new e-commerce strategies that looks at some of the top trends affecting retailers at each stage of the purchase funnel and how they're responding to those shifts.
Here are some of the key takeaways:
- Within digital, consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets. Paid search, affiliate marketing, and email all increased their share of e-commerce referrals last year, according to Custora.
- Paid search especially stood out as a major source of spending by retailers. Search ad spending grew 18% YoY in Q4 2015, according to IgnitionOne.
- Mobile continues to drive the most sales growth for retailers, but sales still aren't keeping up with retail traffic. IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.
- Retailers only have themselves to blame for underperformance on mobile, as many still aren't using best practices for mobile websites and apps. Only 60% of the top 100 global retailers currently have a dedicated mobile website, according to The Search Agency.
- The increase in online shopping has put stress on the shipping and logistics industry. The number of UPS ground packages delivered on time during the holidays fell from 97% in 2014 to 91% in 2015, according to ShipMatrix.
- Retailers are beginning to explore alternative shipping options. Earlier this year Gilt Groupe switched its primary ground shipper from UPS to Newgistics.
- Retailers that can't afford to invest in alternative shipping options are offering consumers more fulfillment options using what many of them do have — brick-and-mortar stores. Buying online and picking up in-store, also called click and collect, made up about 30% of e-commerce sales at Sam's Club in 2015.
In full, the report:
- Looks at how retailers are shifting their ad spending and marketing efforts to keep up with online retail behavior
- Identifies which channels are top performers for referral traffic and new opportunities for reaching consumers
- Analyzes how retailers are responding to the rise of mobile purchasing and where they're falling short
- Examines the evolving delivery landscape and the aggressive moves retailers are making to become their own shipping carriers
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