"We are a procrastinator's dream”
— Stephenie Landry, worldwide director of Prime Now
And we couldn’t agree more!
Amazom.com Inc. AMZN has added more than 4,000 items to its Prime Now service just for the holidays. What’s more? Prime Now will deliver up until midnight on Dec 24.
Apart from offering a variety of food items and household goods, Amazon promises to deliver baking supplies, wrapping papers, electronics, toys and other gift items within an hour.
Manhattan members get even luckier! They can order beer, wine and spirits, too.
Through Prime Now, one-hour delivery costs $7.99 while two-hour delivery is free.
Customers in Manhattan, San Antonio, Atlanta, San Diego, Austin, Portland, Baltimore, Chicago, Orange County, Dallas, Sacramento, Houston, Indianapolis, Las Vegas, Miami, Los Angeles, Minneapolis, Nashville, Phoenix, San Francisco, San Jose, Seattle and Richmond can avail the service.
The Popular Prime Membership
The Prime service charges customers a membership fee of $99 per annum and offers guaranteed two-day shipping. This is just the beginning and the perks just keep increasing (unlimited photo storage, Prime now, and much more).
What this Means to Amazon
It’s important to understand the nature of Amazon’s core business. Amazon is mainly an online retailer. This kind of business has a very low barrier to entry. It is cheaper to set up and thus attracts a lot of competition. There is no limit to the number of competing businesses that are waiting to snatch share away from the existing players. eBay EBAY and Alibaba BABA are all part of this group. Online retailers also face competition from brick and mortar stores with an omni-channel format like Wal-Mart WMT.
Therefore, carving a niche in this business requires a lot of marketing, excellent customer service and a rational pricing strategy. Dealing with all three and getting it right in order to maximize profits is a lot of hard work.
To maintain its enviable position in this space, Amazon must constantly offer excellent services. Prime is part of an enhanced delivery strategy that rewards loyalty, so it’s an important part of Amazon's growth.
The reason why Amazon keeps increasing the perks of Prime members is because as subscriptions go up, operating margins of the company increase. That’s why such services are very important.
Also, the Prime advantage to Amazon is when people pay a subscription charge, they want to maximize the return on it. As a result, they use the service as much as possible, driving sales for the company. Since these people become repeat customers, it increases customer loyalty for the brand. Amazon is giving more and more product and service perks to members so that they stick around.
This Zacks Rank #2 (Buy) stock seems to be gaining popularity by the minute (if not second)! After being voted as the most popular tech company of America in 2014 by the American Consumer Satisfaction Index, we think it will continue this streak in 2015 too.
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