One of every five beauty purchases online is made via the Amazon marketplace, according to a new report.
U.S. Prime subscribers increased from 40 million at the end of 2014, and the renewal rate was 95% during the second quarter, says Consumer Intelligence Research Partners.
While Amazon.com Inc. is pushing hard to get consumers to sign up for Amazon Prime, it’s two-day shipping and more subscription program, it never publicly says how many members it has. But market research firm Consumer Intelligence Research Partners LLC (CIRP) has a fresh estimate: 44 million as of June 30.
That’s up from 40 million at the end of 2014 and 29 million at the end of September 2014, according to previously released CIRP estimates. CIRP estimates are based on surveys of consumers who made a purchase at Amazon.com during a three-month period.
CIRP says Amazon converts 70% of consumers who sign up for a 30-day free trial of Prime into paid members, and it is getting better at getting existing paid members to renew their $99 annual membership. From April to June, 95% of Prime customers whose subscriptions were set to expire renewed their memberships, up from 90% during the prior two periods.
CIRP attributes the increased retention to Amazon making the service more valuable. Amazon offers Prime customers discounts and services non-Prime members either don’t have access to or for which they must pay more. Earlier this week, for example, it offered Prime members one free Dash Button, a device that resembles a key fob that, once set up, lets consumers reorder packaged goods by pressing a button on the device. Non-Prime customers have to pay $5 per button.
Two weeks ago Amazon hosted Amazon Prime Day, a sale event that granted Prime subscribers access to lower prices on many products. Amazon says it sold more than 34 million items that day and signed up more Prime customers than on any other day, although it declined to say how many. Other Prime-only services include Amazon Prime Pantry, an e-grocery service, and access to Prime Instant Video streaming content.
Amazon wants to sign up more Prime consumers because they spend more than non-Prime customers on the site. CIRP estimates Prime customers spend $1,200 with Amazon annually versus $700 for those without Prime.
Amazon in 2014 increased its spending on digital and traditional advertising by 47%, according to the 200 Leading National Advertisers report from Advertising Age’s research division. It estimates Amazon spent $1.2 billion on advertising in 2014, making it the 33rd largest advertiser by spending in the United States, and the fourth-largest retail advertiser, behind Wal-Mart Stores Inc., Target Corp. and Macy’s Inc.
Much of that advertising promoted Prime membership. Amazon’s “More to Prime” 30-second TV ad aired more than 4,200 times nationally from April to June 29, per iSpot.tv Inc. analytics.
Amazon last week reported $34.19 billion in net product sales for the first six months of 2014, up 10.4% from $30.96 billion a year earlier. It says it spent $2.23 billion on marketing over the same period, up 23.2% from $1.81 billion a year earlier.
Amazon is No. 1 in Internet Retailer’s Top 500 Guide.