Amazon brought in $45.7 billion in online store net sales in Q4 2019, besting its previous high of $39.8 billion from Q4 2018, per its earnings release.
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The segment grew 15% year-over-year (YoY), excluding foreign exchange rates, which is a steep drop from the 22% YoY increase it posted in
Q3 2019. However, it does represent a slight acceleration from its 14% increase from Q4 2018, and given the mammoth amount of revenue Amazon brings in during Q4 thanks to the holiday season, its annual comparison may be more relevant.
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And CEO Jeff Bezos announced that Amazon now counts over 150 million Prime subscribers globally, with more consumers joining Prime in Q4 2019 than ever before. Bezos last discussed the e-tailer's number of Prime members in
April 2018, when he revealed its global subscriber base had surpassed 100 million. This suggests that Amazon has added approximately 50 million Prime subscribers in less than two years and may mean it will continue to grow the program fairly rapidly.
Bringing Prime to new markets, like Brazil, has surely bolstered the program's ranks, but two new values may also be responsible for Prime's success.
Amazon's shift from free two-day shipping to free one-day shipping. Amazon
announced the change in April 2019 and has been
increasing the number of eligible products and the number of
markets the perk is available in since then, culminating in the number of products Amazon delivered in the US with one-day and same-day delivery quadrupling in Q4 2019.
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Providing free one-day shipping may be convincing more consumers to sign up for Prime: 77% of US consumers reported that free shipping is key to getting them to make a purchase online and 35% said the same of next-day shipping, per a report from Walker Sands. And as Amazon adds one-day shipping for more products and markets, the perk could bring in even more Prime subscribers going forward.
Its increased grocery delivery capabilities. Amazon's grocery delivery orders from Amazon Fresh and Whole Foods more than doubled in Q4 2019 on an annual basis, per Bezos, and a key part of its increasing popularity may be related to Amazon's recent move to
remove the $14.99 fee Prime subscribers previously had to pay to use Amazon Fresh on top of their Prime subscription fee.This likely attracted consumers to sign up for Prime because, by removing the additional fee, Amazon started providing free grocery delivery for Prime subscribers who lived out of range of Whole Foods'
approximately 500 stores, something it didn't previously do, adding new value to Prime that may be particularly impactful as consumers' interest in online grocery
increases.
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