Can government investigations and activist protests slow the Prime machine?
CEO Jeff Bezos announced on Thursday that the company’s Amazon Prime membership program now boasts more than 150 million paying customers across the globe. Amazon’s stock price jumped more than 10 percent on the Prime news and the company’s broader earnings report for the holiday season. For Bezos personally, that jump amounted to a reported $13.2 billion. In April 2018, Bezos announced that Prime had surpassed 100 million paying members.
For an annual fee of $119 in the US, the shipping and entertainment program offers a growing assortment of perks, including one-day shipping on millions of products, free grocery delivery, and access to a large online library of movies and TV shows.
“Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” Bezos said in a statement. “We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year.”
The program, which launched in 2005, has evolved into the main competitive advantage that keeps Amazon customers locked in and competitors from stealing market share from the Seattle-based tech giant. Prime customers shop more frequently and spend more on Amazon than non-Prime members do. Some studies have also shown that Prime members price compare less as well.
On a call with reporters, Amazon Chief Financial Officer Brian Olsavsky said that Prime’s shift last year from two-day shipping to one-day shipping on millions of items was one reason for continued growth. Amazon also this fall dropped the additional monthly fee for grocery delivery from Amazon Fresh or Whole Foods, boosting adoption of that service among Prime members.
Yet, Prime’s growth has meant that Amazon has had to aggressively expand its own warehouse and delivery operations. Several recent investigations by media outlets allege that this demand has led to above-normal injury rates for Amazon warehouse workers, and sacrificing driving safety in the name of speedy delivery. Amazon has said the warehouse injury numbers reflect the company being more diligent than competitors in recording injuries. The company has also maintained that safety is a top priority within its delivery network.
Amazon is also facing increased regulatory scrutiny across the globe, with active government investigations into the company’s business practices in the US, Europe, and India, one of its most important international markets for future growth.
In the US, the House of Representatives antitrust subcommittee launched an investigation into Amazon, Apple, Facebook, and Google last spring to determine whether the companies’ road to domination has included anticompetitive practices, or whether antitrust law needs to change. The antitrust committee’s most recent public hearing on the topic included the CEOs of companies like Sonos and PopSockets testifying about alleged Amazon unfair business practices. Amazon has disputed their claims.
The Federal Trade Commission has also privately interviewed Amazon sellers to learn about their dependence on Amazon and held discussions with Amazon competitors about topics including whether the Prime bundle of services unfairly undercuts competitors on price, as Recode previously reported.
Amazon’s business practices have also incited employee protest, most publicly around the company’s impact on the environment. Earlier this week, the Amazon Employees for Climate Justice group persuaded more than 350 employees to simultaneously violate Amazon’s communications policy. The protest came in the wake of Amazon’s threat to fire employees who spoke to the press without company approval about Amazon’s business practices.