RetailTechNews’ weekly Amazon Watch brings you some of the company’s biggest moves from the past seven days, analysing how the giant is revolutionising the retail space. In this week’s edition: Prime Membership Numbers Announced; USPS Could Make Amazon Suffer; and Smart Speaker Market Booming.
Prime Membership Numbers Announced
Amazon Prime’s membership tops more than 100 million accounts worldwide, the company said this afternoon, revealing the number of subscribers to its fast-shipping programme for the first time.
With a cost of USD$99bn (£70bn) annually, that means Amazon is bringing in at least USD$9.9bn (£7bn) per year in membership fees. That figure would account for approximately 5.5% of Amazon’s USD$177.9bn (£125.4bn) in revenue for 2017.
This announcement coincides with the news that Amazon is gearing up to expand its Prime Wardrobe service to more customers. Prior to this, the service has been run as a test with a limited audience base.
The service offers shoppers a ‘try before you buy’ service, delivering the items to their doorstep, and only requiring payment once they have confirmed they are satisfied with the item. The move will challenge incumbents in the market such as Stitch Fix, Trunk Club, Wantable, as well as offering a differentiating factor to services like ASOS.
USPS Could Make Amazon Suffer
Post office rate hikes could cost Amazon up to USD$1.8bn (£1.3bn) per year, according to research conducted by Credit Suisse.
These added costs would come into effect if USPS raised its rates by between 15% and 20%, and are being mooted amid President Trump’s continued war against the retail behemoth.
If Amazon decides to keep their shipping with the post office through these prospective changes, then it is likely that hiked shipping costs will be passed on to the customers, testing the loyalty shoppers have towards Amazon.
The raises would take effect through added overheads associated to Amazon’s shipping costs. However, it looks like the long-term impact for the retail giant is going to be limited. If these changes are put into motion, then Amazon will shift shipping volume away from USPS and towards its own delivery services.
Smart Speaker Market Booming
Amazon and Google are the winners, as smart speaker penetration exploded 50% between early December of 2017 and February of 2018, according to new data from comScore. Meanwhile, Apple lost ground as the HomePod release was delayed.
“Recently released comScore Connected Home data from February shows the penetration of smart speakers is now at 20% of Wi-Fi homes”, says Susan Engleson, senior director of emerging products, comScore. “In just three months, that’s more than a 50% increase to an astounding 18.7 million U.S. homes using a smart speaker.”
Engleson goes on to highlight that cheap smart speakers are driving the increased penetration. The Google Home Mini is just USD$49. Amazon’s Echo Dot is the same price. But both were discounted to USD$29 for the entire holiday season, making an entry-level smart speaker incredibly affordable. This matters to brands and marketers, since 22% of smart speaker owners currently shop by voice.
Britain is seeing similar trends, with YouGov’s Smart Speaker report indicating that, while just one-in-twenty (5%) Brits owned one of the devices in Q3 2017, the latest research, carried out in Q1 2018, shows it has doubled to one-in-ten (10%).