By CCN.com: Amazon Prime memberships are over 100 million in the US alone. According to the third quarter revenue call, the company is aggressively expanding Prime to Canada, Mexico, and China. Amazon Prime means multiple things: faster shipping of products bought on Amazon, access to video-on-demand, and some other benefits.
The primary driver for Amazon Prime membership is free, lightning-fast shipping. In some zip codes, people can place an order online and have it fulfilled by courier hours later. The gargantuan catalog of Amazon goods plus a superior fulfillment model have driven Amazon to be the world’s richest company. Selling everything from staple goods to niche electronics, Amazon dominates across categories. It has long presented a threat to the traditional way of life for businesses such as Walmart.
But now things are changing, according to a report by Business Insider. Increasingly, other companies are developing fast-shipping models. Third-party shipping firms are cropping up to help the rest of the retail industry compete on convenience. Walmart has its massive physical footprint of physical locations to potentially leverage an even faster delivery model than Amazon.
A company called Deliverr helps people eBay, Walmart, and other marketplace sellers compete with Amazon for rapid fulfillment. A study by the Diffusion Group found that over 70% of Prime members keep their subscription due to the fast shipping. As this feature becomes less unique, will Amazon lose Prime members to companies that lack a subscription model, such as eBay and Walmart? More importantly, will this potential loss of revenue have a serious impact on the most valuable company?
Survey Says: Unlikely
Amazon’s business model has unquestionably improved the outlook for consumers. Other firms have been forced to compete or face store closure. Brick and mortar retailers posted pitiful Q4 revenues and their stock definitively suffered as a result.
The natural effect of Amazon’s superior fulfillment model is that it becomes the industry standard. Walmart is still working out the kinks in its fulfillment outfit. The Arkansas company is less motivated than others given that it does well even when the economy suffers. Its grocery and home goods departments continue to flourish in virtually every economic situation.
But if Amazon is no longer the only 2-day or even 2-hour fulfillment option, and other marketplaces grow to offer the same array of products, what effect will it actually have on the bottom line of Amazon?
It’s hard to delineate the effect a burgeoning array of options would have on actual Amazon sales. With or without Prime, Amazon strives to be the most competitive possible outlet on price. However, it’s easy to see that Prime membership is a motivator for people to choose Amazon when buying many products. Walmart and other retailers may be a simple rewards program away from slaying the king.