Pop quiz time! Amazon Prime is like which of the following?
The Eagles' "Hotel California," because you can check out anytime you want, but you can never leave.
Black Flag's Roach Motel cockroach bait trap because folks check in, but they don't check out.
All of the above.
The answer's obvious to anyone who has tried Amazon.com's (AMZN) loyalty shopping program where consumers pay $99 a year for unlimited two-day shipping of Amazon-warehoused merchandise, among other perks. Whether it's a supernatural hold or a mortal adhesive, once you sign up for Amazon Prime, you're pretty much happy to be stuck.
Amazon has never spelled out how many of its customers pay for Prime. All that we know is that it has "tens of millions," and a graph shown during last week's Fire smartphone media event showed that growth itself is accelerating at a freakish pace in recent years. Amazon has made Prime an indispensable service, and the leading online retailer has made it a success in a pretty ingenious way.
Plugging the Leaky Bucket
Before unveiling the e-tailer's first proprietary smartphone last week, Amazon founder and CEO Jeff Bezos talked up Amazon Prime. "You can fill a bucket with an eyedropper, if the bucket doesn't leak," he said before going on to explain that Amazon Prime is the bucket that doesn't leak. Without giving numbers, Bezos made it clear that once folks try Prime, they don't cancel.
It's the sticky nature of Prime that likely made Amazon comfortable in boosting the annual price from $79 to $99 earlier this year. Anymore, it's not just about the two-day shipping at no additional cost. While certainly that's important for a company that ships billions of boxes each year. Yes, billions.
However, in a neat twist, Amazon has made Prime sticky even for people who are starting to wean themselves off physical shipments. Prime also includes access to a growing catalog of streaming videos (40,000 titles), monthly Kindle e-book rentals (350,000 books) and with this month's debut of Prime Music, 1.2 million songs for streaming.
Amazon is brilliant. It went from being the company that sold books, movies and CDs to one that offers all three of those categories in digital form at no additional cost beyond $99 a year.
It would make it easier to assess Prime if Amazon told us how many people are signed up. However, we still get a strong metric every quarter when Amazon updates the market on its overall financial performance.
%VIRTUAL-article-sponsoredlinks%Net sales climbed 22 percent to $74.45 billion last year, and analysts see sales climbing another 22 percent to $90.8 billion this year. You don't see retailers ringing up tens of billions in sales growing this quickly, but you don't have any other retailers of this size with a captive hold on tens of millions of shoppers with its sticky Prime program.
Once folks sign up for Prime, every shopping decision begins at Amazon.com. Now that Amazon is building up its digital ecosystem, it's also covered for the future in a way that most traditional retailers can only dream about.
Amazon has you exactly where it wants you in the Prime of its life.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Check out what Motley Fool analysts have to say about the next company that will revolutionize the way the world shops and interacts with its favorite brands every day in this new free report.
15 Products You Can Almost Always Get for Free
Try Quitting Amazon Prime. Bet You Can't
If you want to take a drive across the country but haven't got wheels and don't want to rent a car, there are websites like Auto Driveaway that will help you find a car to drive for someone who is moving and doesn't want to drive their own car. For the return trip, either wait for a car to drive back or book a cheap flight home. It's a great way to see the country if you have the time.
Companies want to know more about you so they can market to you. If you're willing to give up some information about yourself -- like your career title or location - you can get a free year's subscription to a variety of magazines. In recent months, we've seen popular titles like W Magazine, Wired, Wine Spectator, Maxim and Lucky, all for free.
It's a given that your friends should buy your drinks on your birthday, but before you get to the bar, keep in mind that plenty of businesses offer free things on your special day as well. The trick is to plan ahead and hit as many of them as you can.
Many restaurants offer free meals for kids if they're accompanied by a paying adult. However, some do so only on certain nights, so it's worth checking MyKidsEatFree.com to find restaurants in your area that offer free kids' meals. This site could also be handy for diners without kids who want to make sure they don't visit on nights when a throng of children is likely to be there.
Did you know that Aug. 3 is Free National Watermelon Day? Almost every day of the year is some type of national food day, and restaurants are always looking for opportunities to run promotions. Check your local restaurants, or do a Google search for your city and the free food you're looking for. While you might not be able to score freebies regularly enough to avoid ever paying for food, you can certain get at least monthly free food, drinks, and the like.
If you're a fan of phones with Google's (GOOG) operating system, then you're in luck; so many new Android smartphones are released these days that the market has become saturated -- and as a result, most models quickly fall to $0 (with new two-year contracts) after a few months. Even trendy models with lots of media hype eventually follow the same deal path; in fact, based on patterns we've seen thus far, we're predicting that the Samsung Galaxy S5 could become free with a contract as soon as this summer.
We regularly see both Newegg and Fry's Electronics offer free anti-virus software, to the extent that you could get away without ever paying for it. The caveat is that you must buy it and then redeem a rebate to make it free. But paperwork is a small price to pay in the pursuit of a good deal. If you're adverse to rebates, there are also always-free options like Avast.
Getting a full album for free can be difficult, but with the number of music credit freebies we see bundled with Amazon (AMZN) deals, you should be able to amass a stockpile of credits to purchase a number of MP3 downloads that tempt you. Amazon has about 50,000 free songs available for download. Plus, Apple's (AAPL) iTunes, Starbucks (SBUX) and other vendors tend to distribute free songs on a weekly basis. Free music downloads can be found elsewhere, too.
Besides going to the library -- which is an obvious first place to start for free books -- there are lots of ways to get free digital books. Project Gutenberg has more than 39,000 free eBooks, and there is a Free Books app for the iPad. Free e-books are listed on DealNews. If you have shelves full of physical books that you'd like to swap out, sites such as PaperBack Swap and Bookmooch allow you to mail your books to members who request them, and you can request books from others. The more books you give, the more you can receive. These sites are free to join, but the sender does pay postage.
While cutting the cable cord entirely isn't as easy as you might think, the ways to consume movies and TV without paying a cent include free streaming sites like Hulu and Amazon Prime. Keep an eye out for free movie screenings; large studios will frequently try to give a film early buzz by showing it for free to audiences. Additionally, Fandango frequently offers buy one, get one ticket deals for certain cardholders; and now that it's summertime, many parks, libraries and towns have movie nights.
While they might not always come in the exact dimensions you'd like, you can regularly find some sort of freebie photo print deal from the likes of Snapfish, Walgreen (WAG) and CVS (CVS). Shutterfly also offers regular freebies, but shipping will tack on a small fee.
Many health and beauty companies offer free samples, and like free magazines, you'll have to offer up some personal information to get the goods. Keep an eye out for free samples from Target (TGT) and Walmart (WMT). Individual brands also offer free samples of new cosmetics they're trying to promote, but if you want to skip the customary six to eight weeks for delivery, you can instead scout out free samples at drugstore counters and Sephora.
Free apps are everywhere. And at some point even the typically expensive titles see a temporary price drop. If you're particular, set up an email alert and wait for the app of your choosing to fall in price.
While you can't always wait around for free shipping when a special promotion is on the table, everyday orders that aren't time-sensitive can benefit from waiting for a shipping discount. We frequently see a variety of popular vendors offer some sort of shipping deals, which makes it hard to justify spending your cash on the service for an average order.
As a society, we often dispose of perfectly good items in the pursuit of finding something newer or better, so before you make any large purchases, because sure to check Craigslist and Freecycle for free goods. Often, people just don't want to make the effort to move or properly trash them, so you can sometimes get something substantial -- like a wardrobe or shelving unit -- without paying. It goes without saying though that you should make sure any and all items are in working order and in good shape. You don't want to be hauling away another person's junk, even if it is free.