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Summary:

Thanks to bigger selection, convenient return policy and addition of digital goods, Amazon is quickly sucking up more of our spending dollars. No it is not just me talking — data shows a sharp jump in per account spending and it is only the beginning. Bezos FTW!

business girl with shopping bags

I am one of those strange people who think that Amazon Prime is perhaps the greatest thing since, well, Amazon.com itself. Pay a flat fee, and you can pretty much order anything you want from the big online merchant and get it delivered to your front door in 48 hours. In many ways, the convenience of going to one location to buy most of my stuff and not worry about shipping charges is why Amazon has started to take a bigger share of my household spend.

So unless it is a big brand product or a luxury item, Amazon has my shopping vote. And if that was not enough, when I do end up in a retail location, I do a price match with Amazon using its iPhone app – before making a purchase.

In a recent survey of smartphone users conducted by Google, nearly 79 percent of respondents used their smartphones for shopping, and three out of four smartphone users made purchases either in-store or online using their phones. Apparently seven out of 10 smartphone users turn to their phones while shopping in a store, which shows the phone is often in use from the time research begins until the moment a purchase is made.

But beyond the mobile shopping, what is helping Amazon transform into a one-stop shop is bigger inventory, convenient return policy and good service endears the company to many of us.

The ramifications of this behavior are going to be pretty profound, and in case of Amazon, for the better. The signs of a better future are already here for all to see. Ben Schachter, Internet analyst for Macquarie Securities in a research report estimated that Amazon’s revenue per active account on a trailing twelve-month basis has grown 121 percent since 2003 and 63 percent since 2006.

On an average, an Amazon customer spends about $245 every year across all its sites. In comparison, Amazon customers were spending about $111 per year in early 2003 and about $138 in early 2006. I am of the first belief that this number is going to go up even higher as Amazon has started to add a whole different slew of services.

Many of us underscore the importance of digital goods. Many of us buy digital version of music, movies and books with a casualness that adds to our monthly spending. (I have 11 unread books already on my Kindle app.) For instance, during the first quarter of 2011, Amazon saw a big jump in units sold, thanks to the growing demand for e-Books, a trend that is likely to continue according to Schachter. And that is only going to help increase the average spending on Amazon.

What does your Amazon spending behavior look like?

  1. Amazon is really good spot to make online purchase, mostly the due to the offers we get , which we dont get at other store. Personally I also prefer Amazon for online shopping.

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  2. Including electronics, ebooks, paper books (yes I still buy those) and household appliances etc my spend is well over 1000$ a yr on Amazon, closer to 2.

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    1. You are big spending geek. I always knew that about you. But is your spending because of Amazon prime?

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  3. I used to be one of those “only spend $250 or so a year” people, until this year. Thanks to Seattle’s Amazon Fresh and Amazon Now services, I do all my grocery shopping through their sites. Amazon now lets me do free deliveries of thousands of regular Amazon items through Amazon Fresh deliveries, and I’ve had the item in my hands (yes, including paper books) in as little as 4 hours. I now spend around $250 a month, and overall it’s been a huge time and cost saver.

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    1. I wish we had Amazon Fresh option here in SF :-)

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  4. I am an Amazon Prime whore. I will even pay more for something if I know I’ll get it in 48hrs. I easily spend $200 a month from them be it books, diapers, printer ink or light bulbs even. I just bought underwear (Very nice patagonia underwear) from them. Prime is a drug and I actually bail on buying things from Amazon that do not have the free shipping. It is the best non-loyalty loyalty program in the world

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    1. Second that Dan. I was just talking to my dad about how I know for a fact I spend more on amazon than anywhere else only because of prime. Combined with one-click it’s a potent combination. I’ve made 4 separate orders in a day before all because of these two on items I know I would not have normally purchased if 1) it wasn’t going to arrive in a day or two, and 2) I can buy it with one click. The “best non-loyalty loyalty program” is exactly what it is.

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  5. Nice, more income…

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  6. Andrew Macdonald Saturday, May 21, 2011

    I must admit, I fell in love with Amazon a few years ago, and am also a loyal subscriber to their Prime service.

    I estimate I spend a good £1500 a year on Amazon, which in US is close to $3000 I believe. It’s the first place I go to look for items I need, I buy a lot of electronics and technology from the site, which is what mainly accounts for my large spend with them.

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  7. Amazon Prime is far worse than what you’ve written because it teaches you to expect your purchases in 1-2 days for very little. When Amazon doesn’t have something, you feel very irritable because it means you’re either a) waiting a lot longer than usual or b) end up buying the same item in a store for much more.

    It’s also a logistical marvel that they can ship things to you in one business day for only $4 more. Whoever came up with Amazon Prime is a genius.

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  8. I thought Amazon Prime was a bad move for Amazon when I could purchase a $12 replacement piece for a Weber grill and have it show up 2 days later in a huge box with no shipping charges.

    I thought Amazon would realize their mistake, then discontinue the program.

    Online retailing. One more thing I don’t know much about.

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    1. The logic behind Prime is that more often than not, shoppers won’t “eat up” all the costs because they’re not shopping as much as those who take full advantage. This, coupled with great negotiated rates with shipping carriers allows Amazon to continue offering the service.

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      1. Pamela

        What a wonderful, succinct reasoning behind Amazon Prime and its success.

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  9. Unfortunately, buying everything from Amazon.com doesn’t feed as much into the communities as shopping more independent stores. Aside from Amazon.com you could also shop other online stores that utilize Amazon Checkout.

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  10. For people who love the convenience and range of shopping from Amazon, you can still make big savings by purchasing products at the best price at the right time.

    Our startup http://www.happybuy.com/ tracks thousands of Amazon prices and can tell you when is the best time to buy, along with emailing you of price drops on interested products.

    Its amazing that simply waiting a day or two many Amazon customers regularly save more than 30% due to the constantly fluctuating prices and vendor competition.

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