Inside Amazon’s Prime playbook: How the subscription giant chooses what benefits to add next
In 2005, Amazon Prime launched with a simple promise: unlimited two-day shipping on millions of items. Back then, Amazon was still mainly selling books, DVDs and a limited selection of electronics.
Inside and outside Amazon, many thought it was “an expensive proposition,” Moz Thomas, director of worldwide Amazon Prime benefits, pricing and constructs, said in an interview with Modern Retail.
But the gamble paid off. Today, over 200 million people worldwide pay for Prime, driving $44 billion in subscription revenue for Amazon in 2024. Ultra-fast delivery remains its cornerstone. In 2024, Amazon delivered more than 9 billion items, a record for the Seattle-based company.
Twenty years since its debut, the $14.99-a-month program has grown into one of the most expansive membership offerings in retail. What started as a straightforward idea — fast delivery — has evolved into a bundle of various perks and partnerships, from free Grubhub+ access and fuel savings to live sports and streaming entertainment. Each Prime benefit is aimed at “making your life simpler,” Thomas said.
Deciding what makes it into the Prime benefits package is a mix of customer research, usage data and the tracking of broader industry trends. When evaluating a potential perk, Thomas said Amazon always returns to three core questions: “Will customers love it? Is it good for business? And can we elevate the experience itself?”
Amazon seeks to answer those questions in a few different ways.
How Amazon chooses perks
The company regularly conducts customer surveys and in-depth research to gauge what features or services Prime members value most, often narrowing down broad concepts through both qualitative interviews and quantitative analysis.
Beyond direct feedback, Amazon closely monitors how members actually use existing perks, tracking engagement with services like Prime Video or analyzing search data to spot unmet needs. “We can see what types of content they’re watching, or what they’re searching for that we don’t yet offer,” Thomas said.
Take fuel savings for Prime members, which Amazon rolled out a year ago after customers expressed interest in savings on everyday expenses. Prime members get access to fuel discounts at thousands of participating gas stations across the U.S., which the company says helps save members up to $70 annually. Strategically, the move also helped put Amazon closer in line with Walmart’s rival subscription program, which has been offering members gas discounts for several years.
Some perks emerge less from customer demand and more so from Amazon’s view of where retail and technology are headed. Thomas pointed to the new artificially intelligent version of its voice-activated assistant Alexa as an example. The new software update began rolling out earlier this year, with users paying $20 a month, unless they’re Amazon Prime members, who get Alexa+ for free.
Like many big tech companies, Amazon has been pouring money into AI. Amazon spent $31.4 billion on capital expenses in the last quarter, up about 90% from the same period a year earlier, as the company builds out tech infrastructure to support demand for AI. CEO Andy Jassy wrote a letter to shareholders in April, “Generative AI is going to reinvent virtually every customer experience we know.” Amazon Prime offerings are no exception.
“We anticipate that AI is going to become more important, so that’s one of the reasons why Alexa+ was announced to become a Prime benefit,” Thomas said. “That’s an example of something that was not the [result] of customer research or a usage signal, but we look to see where the industry trends are going and how it might affect customers.”
Prime benefits can accelerate other fast-growing segments of Amazon’s business. In recent years, for instance, Amazon has ramped up its investments in live sports. Last year, the e-commerce giant inked a streaming rights agreement with the NBA, reportedly costing Amazon about $1.8 billion annually. Amazon is also the exclusive partner for the NFL’s “Thursday Night Football” package, which costs the Seattle-based company $1 billion per season. Amazon has similar deals with NASCAR and the WNBA.
“Those rights are awfully expensive, and it’s hard to economically justify them without charging a huge subscription fee,” Thomas said. But rather than charging customers directly for sports content, Thomas said Amazon looks at the overall value a Prime member brings.
“When people come in to watch live sports, they also happen to watch our ads. They happen to go and purchase on Amazon.com They end up buying music, buying our games, buying content on Prime Video and so on,” Thomas said. “We look at the overall incremental value that Amazon gets from that customer to justify some of these sizable investments.”
Pricing and value
While Prime’s U.S. membership price hasn’t changed since 2022, Thomas said Amazon focuses less on price than on the value equation.
“The key goal I have is to make Prime so valuable, you’d be irresponsible not to have it,” he said, quoting an adage from Amazon founder Jeff Bezos’s 2016 annual letter to shareholders. Internally, his team tracks the value offered, engagement with benefits (“value realized”) and how much members believe they’re getting (“value perceived”). Price changes happen only “when the timing is right,” he said.
Amazon also measures when perks aren’t pulling their weight. In January, Amazon ended its “try before you buy” service that sent Prime members up to six clothing items, shoes and accessories at a time to try before completing a purchase. According to Thomas, adoption was low, partly because Prime already offers free 30-day returns. The only real difference was delaying the credit-card charge.
“It wasn’t adding anything for customers, to be honest,” he said. “At the same time, whenever we have some of these services, it means there’s some software engineer somewhere maintaining that service. It just doesn’t make sense to continue.”
Industry experts say these kinds of add-ons matter, but Prime’s endurance ultimately comes down to its fundamentals. “For membership programs that have 90-plus percent renewal rates, like Prime, the core proposition has to work,” said Bryan Gildenberg, founder and CEO of Confluencer Commerce. “For Amazon, the core proposition of Prime is really twofold. One is free delivery, but the other one is that it takes delivery costs out of your e-commerce calculation. It taught everyone that you didn’t have to think about shipping costs for most of your online purchases.”
Looking ahead, analysts say Amazon’s biggest challenge isn’t winning new members but instead ensuring that those members stick around, especially as rivals like Walmart, Target and Costco beef up their own subscription programs.
“When you’ve got 75% of America, you’re really more about renewing,” Gildenberg said. “You’re about making renewal as easy as possible, and then thinking about what the platforms are to be able to generate more revenue from members over time.”
For Thomas and his team, that means offering subscribers the right Rolodex of Prime benefits, even as competitors race to replicate Amazon’s model.
“We expect that, with a lot of the things we do, if they’re good for customers, they’re going to be copied,” Thomas said. “It’s a compliment in some ways. ”