Post contributed by Nick Spooner -
Amazon is so confident about Prime, that they are willing to lose million of dollars each year. Currently Prime costs $79 a year for the quick shipping program.
So will Amazon's loyalty to their program payoff? With so many other options of online shopping analysts believe it will not. Not to mention the likelyhood of Amazon users to spend the $79 of shipping each year.
But the benefit of using Prime for amazon users can be drastic. You can obtain a digital book-lending service for those Prime customers who also have a Kindle reading device. So basically Amazon is trying to build a product that requires one of their products to base off another and so on. From a business point of view, this is genius. But the odds of this happening are slim.
Right now their are 10 million Amazon Prime subscribers, and Amazon believes this is going to continue to grow. So the opportunity of success is there. Amazon has gone from an online supplier of books to basically an online mall. Even though they are competing with companies like Apple, the opportunity of success is there for those loyal customers they do have and look to obtain.
Source - Amazon 'Primes' Pump for Loyalty, Wall Street Journal