JPMorgan conducted a detailed analysis of Amazon Prime, concluding that the membership, priced at $139 annually in the U.S., offers benefits worth over $1,437 per year. This includes estimated savings of $550 on delivery fees and additional savings from services like Prime Video and Prime Music.
As Amazon faces a saturated U.S. market with limited new subscriber growth, the increasing value of Prime is essential for retaining existing members and attracting new ones, particularly internationally. The firm projects that Amazon will have 370 million Prime users globally by the end of 2026, with 139 million in the U.S. and 231 million internationally.
While net additions of Prime members are expected to decline slightly this year, there is potential for growth in international markets where penetration could rise from 33% to 45%. The upcoming Prime Day event is anticipated to generate $7 billion to $8 billion in additional revenue, further emphasizing the importance of Prime in Amazon's business model.
Additionally, there is speculation about a potential price increase for Prime memberships, which could yield significant revenue gains. However, competition from Walmart, Target, and Costco remains a challenge, as they offer their own membership programs at lower prices