AMAZON PRIME, the Seattle-based e-commerce giant’s membership programme, launched in India nearly 10 years ago. Since then, it has had to adapt to the country’s unique consumer pulls and pressures. Jamil Ghani, global VP of the company, was in India recently and had a wide-ranging conversation with Brand Equity. Edited excerpts:
What is Amazon Prime’s key differentiator in the era of quick commerce, since the primary differentiator used to be the speed of delivery?
I’ll offer two responses. Firstly, I’d disagree that shipping alone is the differentiator. For you, it might be shipping. For another customer, it’s Prime Video. These two are the key drivers for choosing to become a Prime member and remaining an existing member. Prime’s differentiators mirror Amazon’s — selection, convenience and price — which are getting better every single year. I put ultrafast (quick delivery) in a continuum of what Prime members can enjoy. That’s for your most pressing, urgent needs. For example, I needed bananas in my hotel room, so I ordered them on ultrafast. I also like to take gifts home for my three daughters, so I bought them backpacks available with next-day delivery.
Is quick commerce affecting the Amazon Prime membership growth?
We are seeing the same dynamics in ultrafast adoption that you’re citing for the space overall: Prime members — already engaged shoppers before ultrafast — are also increasing their frequency. One thing is true about Amazon — and it will be for ultrafast as well, just as it was for same-day, sub-same-day and next-day — is that we respond to customers’ signals.
We follow where our members go and we will adjust the selection accordingly. It’s important to put ultrafast in a continuum. We’ve built and will continue to build a robust supply chain that is flexible so that as needs change, we can adjust.
The model for next-day delivery is completely different from a hyper quick 10-minute delivery, from both a supply chain perspective as well as a business model perspective.
You are getting at two very important aspects. First is the operational evolution: Are we prepared to evolve in the way necessary to operate thousands of items within 10 minutes? Absolutely. It’s different, but that doesn’t mean there aren’t capabilities that can’t be shared. Globally, like in the US, for example, we’ve invented hybrid buildings that serve multiple jobs and can co-locate inventory.
From a business standpoint, that’s important because as members use one benefit and then start using another, the retention goes up correspondingly. It becomes an effective way for us to nurture long-term relationships.
Prime has changed over the years. For something that started as a delivery promise, how do you define it internally now?
Amazon Prime is a single membership which, with one simple fee, unlocks an elevated experience. Members, by paying a little more, get a lot more value. In India, our top 10% Prime members are getting 8.5x the value of what they’re spending. As a business, we think about it as the cultivation of the relationship with our most engaged customers. Others might have loyalty programmes, or mechanics like ‘you have to do this thing to earn this status’. That is not Prime’s model.
What percentage of the global Prime base is now from India?
We don’t share those figures. But I can tell you that we have well over 200 million members worldwide, and Prime is growing at a healthy clip. In India, in particular, a big driver of our reach across the country has been the innovation around tiering. What is true for an urban customer may be different than the needs of someone in a tier2 or tier-3 city. That has been a key driver of growth because we’re segmenting to meet the needs of the different customer bases.
About 70% of our new member growth is now coming from tier-2 and tier-3 cities. That is driven by the fact that we’ve introduced Prime Lite and Prime Shopping Edition to enable us to introduce ourselves as a company.
With Prime Video now charging marketplace fees and extra for an ad-free experience, are users feeling frustrated that their premium subscription isn’t truly premium?
About the marketplace fee, if you look across the landscape, it’s a common practice. Prime Video falls under the same umbrella. We have expanded the selection on Prime Video, brought more languages and award-winning shows
Prime is different from other programmes because we want our members to use everything 100% of the time. We know nobody does that, but that sets the high benchmark. To be able to do that, we need to be able to afford it.
On the ad side specifically, data shows that members value having options. There are members who enjoy ads — you see that in the store, you also see that in Prime Video and it adds value. For those who want to avoid ads, we want to have that option for them. The alternative, if we don’t do things like that, is we have to think about price changes for the whole base. This approach lets members customise their experience the way they want, keeping the business sustainable.
What is Amazon Prime’s key differentiator in the era of quick commerce, since the primary differentiator used to be the speed of delivery?
I’ll offer two responses. Firstly, I’d disagree that shipping alone is the differentiator. For you, it might be shipping. For another customer, it’s Prime Video. These two are the key drivers for choosing to become a Prime member and remaining an existing member. Prime’s differentiators mirror Amazon’s — selection, convenience and price — which are getting better every single year. I put ultrafast (quick delivery) in a continuum of what Prime members can enjoy. That’s for your most pressing, urgent needs. For example, I needed bananas in my hotel room, so I ordered them on ultrafast. I also like to take gifts home for my three daughters, so I bought them backpacks available with next-day delivery.
Is quick commerce affecting the Amazon Prime membership growth?
We are seeing the same dynamics in ultrafast adoption that you’re citing for the space overall: Prime members — already engaged shoppers before ultrafast — are also increasing their frequency. One thing is true about Amazon — and it will be for ultrafast as well, just as it was for same-day, sub-same-day and next-day — is that we respond to customers’ signals.
We follow where our members go and we will adjust the selection accordingly. It’s important to put ultrafast in a continuum. We’ve built and will continue to build a robust supply chain that is flexible so that as needs change, we can adjust.
The model for next-day delivery is completely different from a hyper quick 10-minute delivery, from both a supply chain perspective as well as a business model perspective.
You are getting at two very important aspects. First is the operational evolution: Are we prepared to evolve in the way necessary to operate thousands of items within 10 minutes? Absolutely. It’s different, but that doesn’t mean there aren’t capabilities that can’t be shared. Globally, like in the US, for example, we’ve invented hybrid buildings that serve multiple jobs and can co-locate inventory.
From a business standpoint, that’s important because as members use one benefit and then start using another, the retention goes up correspondingly. It becomes an effective way for us to nurture long-term relationships.
Prime has changed over the years. For something that started as a delivery promise, how do you define it internally now?
Amazon Prime is a single membership which, with one simple fee, unlocks an elevated experience. Members, by paying a little more, get a lot more value. In India, our top 10% Prime members are getting 8.5x the value of what they’re spending. As a business, we think about it as the cultivation of the relationship with our most engaged customers. Others might have loyalty programmes, or mechanics like ‘you have to do this thing to earn this status’. That is not Prime’s model.
What percentage of the global Prime base is now from India?
We don’t share those figures. But I can tell you that we have well over 200 million members worldwide, and Prime is growing at a healthy clip. In India, in particular, a big driver of our reach across the country has been the innovation around tiering. What is true for an urban customer may be different than the needs of someone in a tier2 or tier-3 city. That has been a key driver of growth because we’re segmenting to meet the needs of the different customer bases.
About 70% of our new member growth is now coming from tier-2 and tier-3 cities. That is driven by the fact that we’ve introduced Prime Lite and Prime Shopping Edition to enable us to introduce ourselves as a company.
With Prime Video now charging marketplace fees and extra for an ad-free experience, are users feeling frustrated that their premium subscription isn’t truly premium?
About the marketplace fee, if you look across the landscape, it’s a common practice. Prime Video falls under the same umbrella. We have expanded the selection on Prime Video, brought more languages and award-winning shows
Prime is different from other programmes because we want our members to use everything 100% of the time. We know nobody does that, but that sets the high benchmark. To be able to do that, we need to be able to afford it.
On the ad side specifically, data shows that members value having options. There are members who enjoy ads — you see that in the store, you also see that in Prime Video and it adds value. For those who want to avoid ads, we want to have that option for them. The alternative, if we don’t do things like that, is we have to think about price changes for the whole base. This approach lets members customise their experience the way they want, keeping the business sustainable.
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