Amazon to expand Prime programme
Prime has turned out to be a key differentiator for Amazon India in the market share battle with local rival Flipkart
Bengaluru: More than two months after doubling the price of its Prime subscription service, online retailer Amazon India is expanding the Prime programme as it looks to retain a large chunk of its existing customers by making the service more attractive.
Amazon India (Amazon Seller Services Pvt. Ltd) will now offer more than 25 million products in the Prime service, up from 11 million earlier, at a delivery speed of one or two days, said Jamil Ghani, vice-president, Prime International, Amazon. Amazon is also investing hundreds of crores of rupees to expand its video offering in India, including spending on producing original content.
Under Prime, Amazon offers fast delivery, additional discounts and video streaming to customers. “One of our central tenets in Prime is that we increase the value of the programme to the membership. One central way to do that is to continue to invest in existing benefits like selection and video. So this expansion in selection is in line with our belief that every day customers should have more selection to enjoy. We also add value by introducing new benefits so there’s more to come there as well,” said Ghani.
In November, Amazon increased the subscription price for Prime to Rs999 a year from Rs499. The company launched Prime in July 2016 at an initial discount of 50% from its price of Rs999.
“With increased selection, we feel that Prime is worth that (price),” said Akshay Sahi, head of Amazon Prime in India. “The benefits we’re providing have reached a significant value and customers have had enough time to try that programme out so now we can go to our (original) price.”
Amazon is also introducing a music service to rival that of Apple Music and a similar offering from Google. The company may launch the service in India this quarter.
“In other countries, we charge an additional fee for access to the unlimited music catalogue. But in India, we’re including it in Prime at no additional charge. So from a disproportionate value stand point, when you line up the selection growth and the speed of delivery, plus the video catalogue and original content, plus music and other things in pipeline, it’s clear we are taking care of the needs and wants of our Indian customers,” Ghani said.
The Prime programme has turned out to be a key differentiator for Amazon in the market share battle with local rival Flipkart, especially in big cities. Amazon declined to share the number of Prime subscribers, but it said some 30% of all orders on Amazon India come from Prime subscribers. Research shows Prime customers spend a lot more on Amazon than they did previously, they buy products they weren’t buying earlier and they also tend to reduce their spending on other platforms.
Mint reported on 18 October that Flipkart Ltd plans to relaunch a loyalty programme to compete with Amazon Prime. Flipkart had launched a loyalty programme called Flipkart First, but the company lost focus in making it work. As part of the new loyalty programme, Flipkart plans to offer customers access to a wide range of consumer internet services and has held talks with several internet start-ups including MakeMyTrip, BookMyShow and Ola for potential partnerships, Mint reported.
While Amazon Prime has proven to be a success in top cities, there are doubts if the service will prove appealing to the masses in smaller cities and towns, which is the next frontier for e-commerce firms. Indian customers are known to be extreme value seekers and a majority may not have the appetite to pay for a subscription service, analysts say.
Amazon said that it is designing Prime so as to appeal to a large section of the population.
“The combination of benefits is broadly appealing. We see in every geography, including India, a distribution of members across a broad spectrum of the population. Some members join because of the fast and free shipping, some join because of video but it is broadly appealing. We’ve acquired members from 300-plus cities,” Ghani said.
Editor's Picks »
- Markets yet to warm up to KEC International’s record order book
- Indraprastha Gas and Mahanagar Gas shares are low on fuel
- Overhang of capacity constraints lifts for ACC, Ambuja Cements
- Stock market traders fall for the ‘buy rural’ narrative, once again
- Continuing volume momentum puts Indian ports in a good position