Luring the Amazon addicts

The success of Amazon's Prime loyalty program has caught the attention of other retailers.

By Kim Peterson Nov 29, 2010 2:32PM
Reginald Armstead, Jr., of Phoenix, sends a package on its way after packing it at the 800,000 sq. ft. Amazon.com warehouse in Goodyear, Ariz. Amazon.com Inc (©Ross D. Franklin/AP)Are you in the cult of Amazon (AMZN) Prime? The endless parade of brown boxes showing up at your door would be the first sign.

You've broken up with other stores. After all, you've paid $79 annually to join Amazon Prime, so you might as well get your money's worth, with two-day shipping to boot.

Newsweek says Amazon Prime "may be the most ingenious and effective customer loyalty program in all of e-commerce, if not retail in general." It's such a cult, in fact, that other stores are rushing to copy it.

Prime is one of the main forces behind Amazon's superstar stock price, writes Brad Stone. It's also the reason the company's sales jumped 30% in the recession.

Competing retailers are testing the free-shipping waters, although Prime will be difficult to replicate exactly. Wal-Mart (WMT), Best Buy (BBY), Target (TGT) and J.C. Penney (JCP) are offering free shipping on certain items, Newsweek reports. Post continues after video:
Other stores, such as Barnes & Noble (BKS) and Toys 'R' Us, have launched a Prime knockoff called ShopRunner, which also costs $79 and offers two-day shipping.

Amazon, in its typical close-mouthed fashion, doesn't give out specifics about its Prime program. But analysts think there are probably 4 million members in the U.S.

That's relatively tiny, but those 4 million are dedicated buyers (I know because I'm one of them). Analysts say that people bump up their Amazon purchases by about 150% after joining, Newsweek reports, and probably account for up to 20% of Amazon's total U.S. sales.

The big question now is whether free shipping from other stores will cut into Prime's success. Is that $79 fee such a bargain if Wal-Mart and others continue to dangle tempting offers after the holidays?

Tags: internet
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
273
273 rated 2
482
482 rated 3
661
661 rated 4
635
635 rated 5
639
639 rated 6
619
619 rated 7
489
489 rated 8
277
277 rated 9
166
166 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
LUVSOUTHWEST AIRLINES CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.