Amazon Prime membership will accelerate overseas expansion

According to foreign media reports , Amazon is reorganizing the leadership structure of the Prime team to accelerate its expansion in international markets.

Business Insider said that Amazon's Prime membership program is close to saturation in the US market, and Amazon intends to promote Prime more actively in overseas markets to increase sales in international markets.

According to a May report from Evercore ISI, Prime penetration in the U.S. market reached a record 77% this year , up from 67% in 2020. This is the fastest growth rate in a decade, according to Evercore estimates. Globally, Amazon revealed earlier this year that it has more than 200 million Prime members worldwide, up from just 100 million Prime members in 2018.

Data shows that the Prime membership program provides a strong impetus for customers to shop on Amazon. Evercore research shows that these members spend nearly three times as much as non-members on Amazon-related websites and shop more frequently.

In the company's quarterly earnings call last week, Amazon CFO Brian Olsavsky said Prime membership benefits are very attractive to customers in non-U.S. markets. Streaming video, in particular, is more attractive to users in many countries because a higher percentage of Prime members watch videos in these markets.

But Olsavsky said the benefits offered to Prime members also require Amazon to make huge upfront investments, such as an additional $1 billion in content costs this year. As a result, the business is largely the source of steep losses: In the third quarter, Amazon reported an operating loss of $911 million on sales of $29.1 billion in its international business.

International sales also slowed to 16% in the latest quarter , compared with 37% growth in the same period last year and an average of 46% in the first five quarters. Still, Amazon plans to continue investing in overseas markets. The company recently launched Prime in new markets including Poland and Sweden and opened a site in Egypt, and it has pledged to invest more than $8 billion in India.

“We will be profitable internationally for the long term,” Olsavsky said on an earnings call last week.

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