Amazon Optimus Prime - John Paczkowski - Commerce - AllThingsD: " . . . Accounting for cost of sales, shipping, marketing, technology, etc., CIRP and Morningstar figure Amazon made about $78 per Prime subscriber last year. In other words, that $79 annual Prime fee is almost entirely profit. Not bad. Particularly since the research firms expect Prime membership to reach nearly 25 million by the end of 2017. And there’s more upside to that spike in membership than just the $78-per-subscriber profit Amazon’s reportedly collecting here. For one thing, Prime members have little reason to shop elsewhere for anything they don’t need immediately. So, with Prime, Amazon is creating a community of dedicated customers, and building a moat around them in the process. Note that CIRP found that more than 95 percent of current Prime members plan to renew their memberships. For another, Prime is helping to build an audience for Amazon’s digital content offerings; one third of Prime members use Amazon Instant Video weekly. . . .Said Morningstar analyst R.J. Hottovy, “We believe that as more members take advantage of the Prime content offerings, this will have a halo effect on other digital media purchases and should become an increasing meaningful free cash flow contributor in the periods to come.” Prime was responsible for about a third of Amazon’s consolidated segment operating income in 2012. . . . ." read more at link above
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