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Amazon has one secret weapon, and everything the company does is an attempt to make that weapon better, according to one analyst.

“Amazon’s strong Prime membership growth represents one key pillar of Amazon’s long-term business model,” Eric Sheridan, an analyst at UBS, wrote in a recent note. “In combination with increasing FBA traction (i.e., ‘Fulfilled by Amazon’), Amazon has created a powerful flywheel effect and ‘sticky’ ecosystem that is likely to be supportive of a high teens revenue growth CAGR (’16-’21) over the next few years.”

UBS completely reformatted how it evaluates Amazon’s business, in part, to better factor in the multiplying effect of Amazon Prime subscriptions. Sheridan mentions several growth opportunities in his note, and all enhance the success and growth of Prime subscriptions. These opportunities include advertising, Fulfillment by Amazon, streaming video and more.

Prime subscriptions are the company’s secret weapon because Prime subscribers are incredibly loyal.

Almost half of Prime subscribers spend $800 or more at Amazon, and 74% of Prime customers shop with Amazon at least twice a month, according to a recent survey. This means once a customer buys into Amazon’s Prime offering, they are really loyal to the service.

Sheridan says global prime subscriptions …read more


Source:: Businessinsider – Finance

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