Ben Schachter, an analyst at Macquarie Securities, recently told The New York Times that by 2020, he expected half of American households would be Prime members. He added that the prediction was conservative. By some estimates, Amazon Prime already reaches about a third of U.S. households.
In 2013, Amazon shared that it had "tens of millions" of Prime members worldwide, and at the end of 2014, the company said global Prime subscriptions were up 53% and North America subscriptions were up 50%. But beyond those teases, Amazon has remained tight-lipped.
When asked about Prime growth during the third-quarter conference call, Amazon CFO Brian Olsavsky merely said, "We are very happy with the growth, not only in participation, but also purchases and retention, and we had a very successful Prime Day in July that we're really happy [about]."
The Consumer Intelligence Research Partners estimates that Amazon has reached 44 million U.S. Prime members, and according to analysts at Cowen, U.S. Prime subscriptions reached 40 million in October.
The question now is how much room there is for growth. Schacter, who estimates that Amazon will have at least 40 million Prime subscribers globally by the end of the year and possibly as many as 60 million, sees the U.S. growth trajectory continuing to a point where at least 50% of American households have Prime. There are currently about 115 million households in the U.S., according to Census data, which implies that Schachter believes Amazon will reach at least 58 million Prime subscriptions in the U.S. in the next five years.
Schachter did not immediately respond to a request for comment for this story.
Other analysts agree seem to suggest this milestone could be reached even sooner.
RBC Capital Markets analyst Mark Mahaney thinks the U.S. number could already be close to 50 million, based on a September survey of 1,617 U.S. consumers in which 40% said they were Prime members.
Needham analyst Kerry Rice also believes Prime is well on its way.
"If the estimates are correct that there are 30 to 50 million Prime accounts [in the U.S.], it seems that reaching 58 million households should be achievable," Needham analyst Kerry Rice said. "The implications are certainly positive for Amazon, as Prime members spend significantly more than non-Prime members."
Prime membership costs $99 a year and includes free two-day shipping along with a number of other benefits like video and music streaming, cloud storage, and access to Prime Now, which delivers select products within an hour.
Assuming Amazon keeps the cost of Prime membership at $99 a year, those potential 58 million households in 2020 could generate as much as $5.7 billion a year in revenue.
But for Amazon, it goes well beyond the annual fee. Prime members tend to spend much more with Amazon than non-Prime members and are incredibly valuable to the company.
ITG analyst Steve Weinstein estimated that Prime members spend $1,000 more a year on average compared to non-Prime members, and research firm Millward Brown estimates Prime members are almost five times more likely to make a purchase in the same shopping session compared to non-Prime members.
"What our data suggests is that Prime Members are materially more loyal (more spend, more purchases, more satisfaction, more intent to spend) than non-Prime customers," RBC's Mahaney wrote in a note in September. "What is more, our analysis suggests that as Prime Members mature (Year 1, Year 2, Year 3, etc.), they also become materially more loyal (more spend, more purchases, more satisfaction, more intent to spend)."