Despite a $20 increase in its Prime fees, Amazon Prime membership numbers soared, and the company crushed analysts' earnings expectations.
Amazon Prime membership swelled by 50 percent in the United States in 2014.
It’s quite an accomplishment, considering Amazon hiked its annual Prime membership fee from $79 to $99 last year.
“When we raised the price of Prime membership last year, we were confident that customers would continue to find it the best bargain in the history of shopping. The data is in and customers agree,” Amazon.com CEO Jeff Bezos said in a statement.
A fourth quarter Amazon earnings report also revealed that Amazon posted a profitable quarter, effectively squashing analysts’ expectations of 17 cents per share, instead, recording earnings of 45 cents per share, nearly triple expectations.
The e-commerce giant made $214 million in the fourth quarter and saw a 15 percent rise in revenue. The numbers sent Amazon’s stock up 12 percent in after-hours trading, Re/code said. The timing could not have been better.
Amazon was coming off its largest quarterly loss in more than a decade, as it continues to spend huge sums on risky new projects such as its own original films and one-hour delivery in New York City and more cities in the future.
Many of these new initiatives are aimed at attracting new customers to Amazon Prime.
While Prime memberships soared by 50 percent in the United States last year, the increase was bigger worldwide, at 53 percent, Amazon said.
According to The Huffington Post, a new report found that Amazon Prime members spend an average of $1,500 per year. Regular Amazon customers spend less than half that, buying about $625 in goods off Amazon each year.
Though Amazon is hush-hush about the number of Prime members, the HuffPo reported an estimated 40 million Prime members in the United States. Do the math. Prime members are hugely valuable to Amazon.
I’ve been a happy Prime member for the past several years. Even at $99 per year, I still believe we get more than our money’s worth. In the past, I only used Prime for its quick shipping. Now, our family routinely uses the Amazon Prime Instant Video, and we’re considering trying the Prime Pantry.
Are you an Amazon Prime member? What’s your favorite part of the service? Share your comments below or on our Facebook page.
Check out other ways you can save when you’re shopping on Amazon by watching this video. Money Talks News finance expert Stacy Johnson shares his secrets.