How Amazon Prime cracked the subscription model to succeed in India

Abhishek Law Kolkata | Updated on July 04, 2018

Akshay Sahi, Director & Head, Amazon Prime, India

Sees yet more scope to grow in terms of subscribers and brand tie-ups

One out of every three orders placed on Amazon India is an ‘Amazon Prime’ order. This was a piece of statistics that the e-commerce major quoted almost a year ago, indicating that its flagship subscription model had caught on in the country.

Today, the subscription numbers have changed, and Amazon India does not share them. Globally, there are 100 million Amazon Prime subscribers.

In India, the service encompasses offerings that include free shipping to two-day deliveries, availability of video content (web-series, movies and original content), music streaming, among others.

“There is still a lot of scope for Amazon Prime to grow in India, be it in the number of subscribers or the brand tie-ups,” says Akshay Sahi, Director & Head – Amazon Prime, India.

Amazon Prime, market sources say, has been a success when it comes to cracking the subscription model in India. No wonder Amazon Prime is witnessing its fastest membership growth in the country.

So, how did Amazon crack the subscription model?

Subscription model

According to Sahi, people saw value in its offerings.

The company kicked off Prime services around mid-2016 with free-shipping and two-day delivery promise offers; a few months later, it added video content and then expanded the content library (with regional offerings too).

The subscription cost was deliberately kept low at ₹499 a year with occasional free-trial periods. Amazon further sweetened offerings with Prime Day sales and early access to lightning deals for Prime subscribers.

It also worked with brands for increased discounting and so. Additionally, it tied up with telcos for free one-year subscription plans.

“The Prime Day 2017 event (in July) saw an overwhelming response,” Sahi said.

Perhaps it was this success that gave the e-commerce major the confidence to hike annual subscription fees to ₹999 (double the introductory price) late last year.

Sahi, however, says: “We knew ₹999 was the right price. So, we went ahead with it.” Also added within the subscription cost was the music streaming service Amazon Music.

Flagship model

Amazon Prime, Sahi says, will continue to be the company’s flagship service.

“Prime will remain our flagship subscription model,” he maintains.

Targeting increased subscription, Prime has now come up with a monthly subscription model (at ₹129 per month).

“In India, people do budget their spendings on a monthly basis because of which we went ahead with a monthly subscription model,” he claimed.

This apart, the company will on July 16 hold its Prime Day 2018 with a host of deals and exclusive launches.

Published on July 04, 2018

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