8/14/13

An untapped market for online retailer loyalty programs

22% of online consumers not in a rewards program would pay to join one, comScore finds.

Paul Demery , Managing Editor, B2B E-commerce

Although more than half of Internet users say they would not pay to join an online retailer rewards program—such as the Amazon Prime two-day shipping program that charges an annual fee of $79—more than one-fifth of online consumers who have not signed up for a program say they’d be willing to pay for one, Internet research firm comScore Inc. says in a new report. It also notes that more than half of the users of Amazon Prime, a service from Amazon.com Inc., say they are “very satisfied” with the service, and that a quarter of them say they make all of their online purchases on Amazon.

The report, “State of the U.S. Online Retail Economy in Q2 2013,” notes that 49% of online consumers have already signed up for an online retailer rewards program, including 10% who have joined a fee-based program. It also notes that 64% of online consumers overall say they would not pay to join a program.

Of the 51% who have not signed up for a rewards program, 22% say they would be willing to pay for one, comScore says. The study lists the following reasons consumers cite regarding why they would agree to pay for an online retailer rewards program, with the percentage of consumers citing each reason:

● Free two-day shipping, 26%

● An ability to share membership, for a single fee, with up to four people, 10%

● Unlimited streaming of online movies and TV shows, 9%

● Special pricing on same-day shipping, 8%

● Special pricing on one-day shipping, 8%

● Instant access to Kindle e-books, 4%

● Other, 1%

The study also listed the follow reasons why consumers say they would not pay for an online retailer rewards program, with the percentage of consumers citing each reason:

● Too expensive, 51%

● I purchase from online retailers who offer free shipping on purchases over a minimum average order value, 42%

● I don’t shop online enough to receive benefits, 42%

● Online shipping is not expensive, so I would not benefit, 15%

● I prefer to buy products in the store rather than online, 13%

● Other, 4%

The study also found that 25% of Amazon Prime members say they make all of their online purchases on Amazon.com, 49% say they make more than half of their online purchases on Amazon.com, while 26% say they make half or less of them on Amazon. ComScore didn’t publicize the percentage of online consumers who use Amazon Prime. An Amazon spokeswoman says there are “millions” of Amazon Prime members, declining to offer a more specific number.

To show how happy Amazon Prime members are with the service, the study provided the following satisfaction levels with the percentage of consumers citing each:

● Very satisfied, 53%

● Somewhat satisfied, 27%

● Neither satisfied nor dissatisfied, 13%

● Somewhat unsatisfied, 3%

● Very unsatisfied, 4%

Amazon.com is No. 1 in Internet Retailer’s 2013 Top 500 Guide.

Topics:

2013 Top 500 Guide, Amazon Prime, Amazon.com, average order value, comScore Inc., e-books, free shipping, Internet users, Kindle, loyalty programs, online consumers, online movies, State of the U.S. Online Retail Economy in Q2 2013, streaming movies, two-day shipping

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