An annual Prime membership costs $119 in the U.S., but Amazon does things differently in India.
Amazon isn’t just a thriving retailer anymore; it also sells a host of hardware products in the form of smart home devices, affordable tablets, and e-readers. What started out as a foray into e-readers over a decade ago bloomed into an ecosystem that generates billions of dollars in revenue every year.
But at the center of Amazon’s revenue-generating machine is its Prime membership. Recent estimates suggest Amazon has well over a hundred million Prime subscribers in the U.S., and with an annual membership now costing $119, revenue from Prime is well over $10 billion annually. With figures plateauing in the U.S., Amazon’s long-term strategy for Prime relies heavily on international markets. And nowhere is it more evident than India, where Amazon has a considerable presence. Amazon debuted in the country back in 2013, launching Prime in July 2016.
Unlike the U.S., Amazon didn’t have first-mover advantage in India, with several players already present in the market by the time it debuted in the country. To counter the threat, the retailer went on the offensive, edging out its rivals by endless sales and heavily subsidized Prime memberships. Annual Prime membership in India started off at just $7 (₹499) for the first two years, and even now it costs just $14 (₹999).
And while Prime membership in India costs roughly a tenth of its U.S. counterpart, it still delivers the same amount of value. A lot of that has to do with the fact that the Indian e-commerce industry is still in its nascent stages, with Amazon targeting user acquisition over revenue. Because unlike the U.S., Amazon isn’t the only major player in Indian e-commerce.
Prime is key to Amazon’s long-term success in India.
Amazon has been locked in an intense battle with Flipkart — India’s largest homegrown e-commerce player — for several years now, and with Walmart shelling out $16 billion for a controlling stake in the venture last year, the competition is only set to intensify.
In a bid to amass users, Amazon positioned its Prime membership as an all-inclusive gateway to unlimited free deliveries, streaming music and video, and a host of other benefits. When Prime kicked off in India nearly three years ago, it was primarily targeted as an affordable way to get free two-day deliveries on Amazon, but the program now includes Prime Video, Prime Music, Prime Reading, and a rewards plan that lets customers receive 2% cashback on their orders.
As Xiaomi showed time and again over the years, there really is just one way to win in the Indian market, and that’s by undercutting everyone else. And when it comes to e-commerce, no one does it better than Amazon. Or to put it another way, Amazon India’s $15 Prime membership is the best deal in e-commerce.
Come for the value, stay for free streaming
Not content to just offer unlimited free deliveries for Prime subscribers, Amazon ventured into content streaming with Prime Video and Prime Music. Both services are free for all Prime members, and now serve as one of the key reasons to sign up for an annual membership.
India has no shortage of streaming platforms, but Prime’s low annual cost makes services like Prime Video an absolute steal. To put things into context, a monthly membership to Netflix starts off at ₹450 ($6.30), with the HD plan costing ₹650 ($9). So for less than two months of Netflix, you get a full year’s subscription to not only Prime Video, but Prime Music as well as Prime Reading.
Amazon’s strategy with Prime makes sense when you look at how much Hotstar — the country’s largest video streaming platform — costs. An annual plan is just ₹999, and there’s also a free tier with ads. Where Hotstar shines though is in sports — if you want to stream any sporting event in India, you’ll have to pay up for the service.
Amazon is essentially giving away its music and video streaming services.
Amazon also did a great job with Prime Video’s content library. Netflix India’s catalog is a mere shadow of what the service offers in the U.S. — with stalwarts like Friends and The Office missing from the platform — but you’ll find both shows on Prime Video. Amazon is also investing heavily in original content, and while its library isn’t as vast as Netflix, the overall quality seems better. I’m particularly interested in seeing the direction Amazon takes in bringing Tolkien’s Middle-Earth to the small screen.
On the music front, Amazon Music is similarly great. The service has a vast selection of songs, and I was able to find most of the albums I listen to on a regular basis. Also, Amazon Music is the only streaming service I use that lets me stream to both Google Home/Chromecast Audio devices as well as Alexa-enabled speakers. Amazon doesn’t use the Cast protocol, but it relies on the same tech that Vizio uses on its TVs.
That’s just the surface of what Prime has to offer in India. Like the U.S., Amazon rolls out deals exclusively to Prime members, and there’s a new rewards plan that incentivizes the usage of Amazon Pay.
In just five and a half years, Amazon has fundamentally changed Indian e-commerce. With Walmart in the fray, it’ll be interesting to see what the next five years bring.
January 15, 2019 at 08:03PM