Over the holidays, Amazon said 10 million customers signed up for a month-long Amazon Prime trial in order to receive two-day shipping perks.
Today, new data being released suggests that a huge chunk of these customers — 70 percent! — will end up paying $99 for an annual membership, according to the Consumer Intelligence Research Partners.
That means, Amazon will convert nearly 7 million of those 10 million trial customers who signed up this holiday.
It’s not clear whether these people are signing up because they want to, or if they forgot to opt-out of the program after the trial expired, but the report seems to indicate that these customers may become loyal over the long haul. It further estimates that about 84 percent, or 6 million, of these customers will renew their membership for a second year (although it’s worth mentioning that the renewal process is automatic).
Clearly, offering a free trial period is a great gateway drug for customers to get hooked on Prime.
The original benefit of the club was free expedited shipping, which enabled packages to ship within two days, but over the years, it has expanded to include other freebies such as music and video streaming services, and other exclusive items, like the ability to buy low-cost Amazon-branded diapers.
The 7 million trial members that convert to paid members should generate almost $700 million in membership fee revenue for Amazon in the coming weeks. CIRP estimates that Amazon will now have roughly 35 to 40 million Prime members in the U.S. with the addition of this new group.
At 50 million members worldwide, Prime alone would bring in roughly $5 billion in subscription fees.
The membership fees will go a long ways in offsetting the cost of offering free shipping. Amazon said earlier this week, that customers saved over $2 billion on free two-day shipping through Amazon Prime and other offers (100 million more items shipped for free this holiday compared to 2013).
Any purchases exceeding $35 ship for free, as well, but over the last few years, Amazon said Prime two-day shipping has become more popular.