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Amazon discreetly testing cut-price Prime subscription
There may soon be two distinct Amazon Prime subscription rates. The US group is currently testing a Prime Lite subscription in India that offers free delivery in two days, and gives access to its Prime Video streaming platform. A test that could potentially herald a notable strategic change for Amazon Prime, if the Lite subscription was also made available outside India.
As reported by TechCrunch.com, the subscription formula being tested costs INR999 (€11.30) annually, instead of the INR1,499 (€17) for a standard Prime account, which offers free deliveries in 24 hours. Amazon has for the time being declined to comment on the trial.
Notably, the news was reported just after Amazon dismissed 1% of its Indian employees. A decision affecting 1,000 local workers that did not fail to catch the eye of the Indian news media, which for years has been reporting on the difficulties faced by Amazon against local competitor Flipkart, bought in 2018 by Walmart.
Driven by the pandemic, at the start of 2021 Prime reached the milestone of 200 million subscribers worldwide, three quarters of whom reside in the USA.
The Prime subscription was launched in India in 2016, and its price subsequently increased, as it did everywhere else: its annual costs is currently $139 in the USA, €89.90 in Germany, €69.90 in France, and GBP95 (€107) in the UK.
A loyalty tool for fashion giants
This news is of some significance for fashion brands, since apparel sells strongly on Amazon. In 2020, Amazon reportedly became the largest apparel retailer in the USA, ahead of Walmart. In Europe, Amazon is the second-largest cross-border fashion retailer, with a 7.6% market share, behind Zalando.
Making a Prime subscription more affordable is also a significant step because Prime subscribers are said to spend an average of $1,400 annually on Amazon, as opposed to the $600 spent by other customers. As a loyalty tool, Prime also gives access to various benefits on Amazon Music, the Twitch live streaming app, and especially Prime Video, a competitor of Netflix and Disney+.
Interestingly, while Amazon is testing Prime Lite, streaming platform Netflix too is turning towards cut-price subscription models, compensating by introducing advertising breaks for the first time, while Disney+ is striving for profitability by trying to tap e-tail opportunities with international brands, as reported by FashionNetwork.com.
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