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