Bottom Line: Opportunity for Prime to shine

 
Elizabeth Fournier

IT’S starting to look like Amazon might actually begin consistently making money one day soon. Having pursued an aggressive – and loss-making – growth strategy since it was founded in 1995, CEO Jeff Bezos and his team are increasingly looking for ways to convert user numbers into real cash.

As Amazon told customers yesterday it was scrapping free delivery on some orders, it also took the opportunity to plug its Prime subscription service.

Since its launch less than two years ago Prime has proved popular, hitting an estimated 10m users globally earlier this year with forecasts as high as 25m by 2017. Members don’t only contribute a £49 fee, they’re also Amazon’s most loyal, high-spending customers, with some analysts claiming subscribers spend $1,224 every year compared to the casual user’s $505. With Amazon guiding estimates down – and Bezos’s fondness for pouring profits straight back into the firm – investors are unlikely to see the fruits of Prime’s labour as soon as its earning update tomorrow. But with shares already up almost 20 per cent so far this year, the whiff of success will be enough to keep them on board.