Weinswing’s Weekly Jun 8, 2018

Executive Summary

1. Amazon is hiking the cost of Prime membership in the US from $99 to $119. The company has already increased the cost for new members and it will begin charging the higher rate for renewals next month. We see this as a risk, and in this week’s note, we outline why.
2. In the US, almost two-thirds of consumers have access to Prime. When we surveyed US consumers in January, some 43% of respondents said that they have a personal Prime membership and a further 21% said that they have access to Prime benefits through someone else in their household, indicating that a total of 64% of Americans have access to the program. The remaining 36% of those we surveyed said that did not have any access to Prime membership.
3. That high overall access rate means that Amazon’s opportunity to grow Prime memberships is becoming more limited, which may be tempting Amazon to try to recoup some more of the costs associated with Prime through higher fees.