Amazon loses interest in acquiring new Prime members

Amazon has switched its focus from acquiring new Prime users to focus on retaining on retaining them instead, according to analysts.

The company recently announced it would close 68 of its bricks-and-mortar retail stores which include Amazon Books, 4-Star and pop-up stores, Reuters reported.

It has meant that the commerce giant’s physical retail footprint is made up of entirely Whole Foods, its Amazon Fresh grocery stores and Amazon Go locations.

Amazon’s ‘Amazon Style’ clothing store is rumoured to launch in California at some point this year.

“An inflection point is probably a good way to frame it,” Placer.ai head of analytical research RJ Hottovy told Business Insider.

That’s a fraction of the number of grocery stores’ locations: Whole Foods operates about 500 stores worldwide, while Fresh has 25 locations.

Amazon’s narrower focus on food while experimenting with apparel is meant to get customers into its stores as often as possible, Hottovy explained.

Grocery and fashion stores are “two of the largest retail categories out there, and ones that you typically see the highest repeat visits in,” he said.

The three banners that Amazon is closing helped the company attract new customers to its Prime subscription offering, according to Hottovy.

Amazon’s book stores, 4-Star locations, and Pop Up shops helped attract new customers to Amazon and its Prime membership, he said.

Hottovy has followed Amazon since it went public in 1997 and has said that the company is trying to get more business from its existing Prime subscribers.

This includes getting more and more customers into Whole Foods and Fresh stores.

According to data from Placer.ai, both of Amazon’s grocery chains averaged about three times the number of visits per customer as the three banners it’s closing, according to data from Placer.ai.

“It’s not so much customer acquisition, it’s more customer frequency,” Hottovy told Business Insider.

Whole Foods has a longer road ahead to keep customers returning to the stores, he said.

But Whole Foods has work to do to get customers in the door more often, according to Hottovy.

“We’re seeing a lot of other grocery stores have success with buy online, pick-up in-store.”

While Amazon’s rivals Target and Walmart have expanded their delivery operations aggressively, Whole Foods has struggled to content with headwinds including a lack of coordination between Amazon Prime shoppers and Whole Foods employees, Hottovy added.

Kantar senior director of digital commerce Celia Van Wickel believes Amazon must figure out the relationship between its Whole Foods subsidiary and its Fresh arm.

Amazon last month informed Fresh grocery workers that they could become direct Whole Foods employees.

Currently, the workers report to Amazon even though they work at Whole Foods stores.

“I think they are still reevaluating the right strategy for Whole Foods in relation to all the banners that they’re going to focus on more closely,” Van Wickel told Business Insider.

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