While it remains to be seen how (or if) the 2013 Marketplace Fairness Act will impact sales for Amazon.com, what we do know is that the online leader seems to have a loyal constituency in its Amazon Prime Membership. For a $79 yearly fee, this group of elite shoppers receives free two-day shipping on eligible items and access to Amazon’s Instant Video streaming service as well as the Kindle Lending Library – and CEO Jeff Bezos is keeping the perks coming.
The risk to competitors is fairly obvious; this shopper coalition gives Amazon a top notch spot in their retailer consideration sets. Our intel tells us that Prime members’ propensity to shop Amazon.com is about double that of the general population for several major retail categories, including Women’s and Men’s Apparel, Shoes, Electronics, Sporting Goods, Linens and Bedding, and Health/Beauty Care. Of course, this doesn’t mean that Prime members are shopping Amazon exclusively or that they shun more traditional brick and mortar retailers. So let’s take a look at who these shoppers are, why they are so valuable to Amazon, and which retailers may be facing a Prime threat.
While Prime members are pretty evenly split on the gender issue, nearly two out of five (37%) are under the age of 35 – that highly sought-after, Millennial-esque demographic that’s got all the B2C businesses twitterpated right now. These youngsters represent the largest age group for Prime members, with 35% falling under the 35 to 54 year old category and 28% over the age of 55. Prime shoppers also have money to spend, with the average household of this group nearing $70,000 – much higher than the U.S. median household income of $52,000. And, one in five (21%) banks over $100,000 per year.
Not only do Prime members possess a greater capacity to spend compared shoppers on average, but they also express more willingness to spend, making this group of Amazon followers a very attractive target market. Prime members maintain a Happiness Score that is higher than that of the general public, indicating that they may have a greater proclivity toward spending than average shoppers. Additionally, Prime members index above average for plans to buy key high dollar durables (computers, TVs, furniture, jewelry, home improvements, mobile devices, etc.) over the next six months.
What also sets Prime shoppers apart from consumers in general is their penchant for fashion – a would-be boon for Amazon, which has been actively bulking up its apparel offerings over the past year. More than three out of five (63%) Prime members indicate that familiar fashion labels are important to them, much higher than shoppers in general (49%). And, one in four (27%) look for the newest fashion trends and styles, a 50% hike above average consumers (18%).
The growth of online shopping in general coupled with the increasing ease of clothing buying via the Web via offerings like virtual fitting rooms, dynamic imagery, garment/product videos, plus, of course, free shipping and return offers, Amazon seems to have a Prime opportunity within its reach: converting current Prime members into more loyal apparel shoppers. This would be a definitive threat to more sartorial-minded shops, which may not have viewed the Kindle-peddling retailer as direct competition in the past and currently welcome Prime members as their customers.
A look at a few key apparel categories sheds light on the retailers that might be more vulnerable to losing current Prime shoppers to Amazon’s advances in apparel. Based on a Risk Score developed specifically for this exercise, Macy’s (Score = 14.6), Kohl’s (10.6), Walmart (7.4), JC Penney (6.3), and TJ Maxx (3.8) appear to be the most susceptible to losing current Prime shoppers to Amazon in Women’s Apparel. Risk was determined by the percentage of Prime members currently shopping these retailers and was weighted by Prime shoppers’ propensity to shop that particular retailer compared to the general population. In Men’s Apparel, Kohl’s (Score = 14.1) and Macy’s (11.5) again appear to be the most vulnerable. In Shoes, however, DSW (Score = 7.4) was identified as the most at-risk, followed by Payless (6.3) and Kohl’s (5.7).
For vulnerable retailers, the key to keeping Amazon Prime shoppers in their stores will be to irresistible value propositions and delightful customer experiences…though here’s the rub – Amazon’s great at that, too.
This article originally appeared on Forbes.com.