Amazon's Prime membership is eating into Costco and Sam's Club's territory
Cheriss May/NurPhoto via Getty Images
According to a note published by Cowen & Co. on Monday, the percentage of US households that only pay for Prime membership has more than doubled over the past four years, from 7.1% in 2013 to 16.2% in 2016. In the same time span, housholds that only use either Costco (from 14.9% to 9.8%) and Sam's Club (from 16.9% to 9.7%) dropped noticeably.
In the meantime, households that pay for both Prime and Costco memberships jumped from 4.8% to 11.3% in the past four years, while the same trend is seen among households subscribing to both Prime and Sam's Club (from 4.8% to 8.5% in 2016).
Cowen said the numbers indicate either Amazon Prime attracting a higher percentage of Costco and Sam's Club members, or signing up new customers who didn't have any warehouse membership before. And as Amazon continues to add more perks for its Prime members, the trend will likely continue, it said.
"The risk is that as Amazon continues to improve Prime's value proposition and add more layers to the Prime service, US households could cancel subscriptions for one or both of the Warehouse clubs. At a minimum, the number of consumers opting to just use Costco and/or Sam's Club 'Only' is likely to continue to decline," Cowen wrote in the note.
Prime is Amazon's paid membership program that gives access to free shipping and its own video and music streaming services. Amazon has never publicly disclosed the number of Prime members, but analysts believe it's the roughly in the range of 50 million to 70 million in the US.
Cowen pegs Prime's total membership at 49 million in the US, or 44% of all US households. That's at an all-time high, and nearly triple the penetration rate in 2012 - all the while Costco and Sam's Club's penetration rates have remained largely flat over the past four years.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
- I spent 2 weeks in India. A highlight was visiting a small mountain town so beautiful it didn't seem real.
- I quit McKinsey after 1.5 years. I was making over $200k but my mental health was shattered.
- Some Tesla factory workers realized they were laid off when security scanned their badges and sent them back on shuttles, sources say
- 8 Lesser-known places to visit near Nainital
- World Liver Day 2024: 10 Foods that are necessary for a healthy liver
- Essential tips for effortlessly renewing your bike insurance policy in 2024
- Indian Railways to break record with 9,111 trips to meet travel demand this summer, nearly 3,000 more than in 2023
- India's exports to China, UAE, Russia, Singapore rose in 2023-24