Three Reasons Why Amazon Prime Has Become a Juggernaut

Matt Shelly
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Since its launch in 2005, Amazon Prime has expanded dramatically from its original inception as a basic free shipping plan. Now, Prime customers have access to a range of products, from streaming video to unlimited music access. As Amazon continues to release new services as part of the Prime membership, it seems poised to dominate the world of online shopping and media consumption.

Access to Customer Data

When a customer signs up for an Amazon Prime membership, he gains immediate access to all of the program's services. The most important is the promise of free two-day shipping on a number of products from Amazon and other sellers. Customers also have access to streaming video through Amazon Instant Video, the Kindle Owner Lending Library and Prime Music. Customers who live in certain zip codes gain access to Prime Fresh, a service that offers same-day delivery of groceries and other household essentials.

With the wide range of services, customers spend up to three times more than they would without a Prime membership. With a single login to Amazon Prime, Amazon gains unprecedented entry into multiple areas of a customer's daily life. Perhaps more importantly, it has access to a variety of customer data, from television and music preferences to frequently used products. Based on this information, Amazon can create tailored advertisements and promotions that speak directly to the customer's needs.

Video Streaming Competition

In April 2014, Amazon Instant Video took a giant step forward by partnering with HBO to offer certain shows in streaming format. Because the agreement was the first time HBO had licensed any of its content to another streaming service, it gave Prime an immediate competitive advantage. Like Netflix and Hulu, two of its main competitors, Amazon offers a variety of network shows and produces its own original content. The addition of HBO shows offers potential Amazon Prime customers an additional incentive to pay the $99 membership fee. That, combined with the free access to Kindle books and music, gives Amazon an outsized hold on the digital entertainment industry.

New Delivery Technology

Perhaps one of the most exciting ways that Amazon Prime is taking over the online shopping industry is its commitment to new delivery technology. The company is currently developing Prime Air, a service that will revolutionize package delivery. Using unmanned aerial vehicles (UAVs) — or drones — the service will get packages to customers within 30 minutes of the initial order. While the service will not be a reality until the company creates more sophisticated technology and the FAA adds UAVs to the national airspace in 2015, Amazon has already conducted initial tests. Drone delivery is just the first step toward futuristic shipping systems.

While free shipping is still the main value proposition of Amazon Prime, the program offers numerous other benefits to customers. As it continues to add new services, Prime is poised to gain entry into every area of customers' lives.

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