Amazon Prime costs $79 per year (or half if you are a student or new mother) and offers free two-day shipping, $3.99 overnight shipping and access to Amazon's streaming video catalog.
More importantly for the e-tailer, the report suggests that Prime now accounts for 30 percent of Amazon's entire operating income, making the club wildly profitable.
Amazon has an active customer base of about 180 million, but Prime members accounted for 9 percent of all purchases, a massive imbalance. The report says Prime members spend $1,224 a year versus $505 for non-Prime users.
In the report, Morningstar says that Amazon made about $78 per Prime member in 2012, after taking out the cost of expedited shipping and the streaming video licensing. Since Amazon breaks even on its shipping and other costs through purchases customers make, the subscription fee itself is completely profit to them.
Written by: Andre Yoskowitz @ 13 Mar 2013 11:39