CEO Bezos reveals figure for first time in annual letter to shareholders
More than 100 million people globally are now paying for Amazon Prime, a sign of how Amazon.com Inc. has used the service to evolve from an online marketplace that struggled with profitability into an e-commerce powerhouse.
Amazon, which has never disclosed the number of Prime members before, revealed the figure Wednesday in Chief Executive Jeff Bezos’s closely followed annual letter to shareholders. The company said in late 2015 that it had “tens of millions” of Prime customers.
Amazon’s story to investors has largely been one of scale. In the company’s view, having a large numbers of customers and clients has allowed it to spread costs broadly and continue investing in technology.
This view is shown in its growing Prime membership, through its massive cloud-server business and how it lets third-party sellers onto its platform to compete against itself for customers. Amazon said Wednesday that a majority of goods shipped world-wide on its platform are now from these sellers.
“This is Bezos saying Prime continues to be a healthy, growing platform,” said Michael Levin, partner and co-founder of investment and market-research group Consumer Intelligence Research Partners LLC. “Bezos is basically saying ‘Here’s our installed base, come and get us.’”
Launched 13 years ago, the $99-a-year Prime service gives customers free, unlimited two-day shipping, access to free music and videos, and other perks.
Colin Sebastian, a Robert W. Baird & Co. analyst, said Amazon’s disclosure on its Prime member count was “in-line to slightly above expectations.”
Mr. Sebastian had estimated the figure was close to 100 million after Amazon reported its fourth-quarter earnings report in early February.
Last year Amazon brought in $9.72 billion in revenue directly from subscription services, including fees from Prime members. The company also benefits from Prime members who tend to spend more money on Amazon than nonmembers and do so more frequently.
Mr. Levin’s firm estimates Prime members in the U.S. spend $1,300 a year with Amazon, while non-Prime members spend about $700.
The letter also said more new members joined Prime last year than in any previous year. Amazon has been expanding Prime internationally, including to Mexico, Singapore and the Netherlands in 2017.
Shares, up 31% so far this year, rose 1.8% in after-hours trading to $1,556.
Amazon separately said that Mr. Bezos was paid about $1.7 million in 2017, which was 59 times the median pay for an Amazon employee. The company disclosed the pay ratio in a securities filing as part of a broader requirement of the postcrisis Dodd-Frank law that went into effect this year. Much of Mr. Bezos’s total compensation, which was flat from 2015 and 2016 levels, came from costs related to his personal security.
Amazon’s median salary of $28,446 is significantly less than some of its technology peers as the company increasingly hires warehouse workers to grow its intensive logistics operation. Those workers are typically paid less than high-skilled technology workers who are commonplace at the company’s Seattle headquarters.
The median pay last year for employees of Facebook Inc. topped $240,000 and was over $160,000 at Twitter Inc., the companies said in recent securities filings. Companies were given some discretion to calculate the median figure, and many have excluded contract workers or people working outside the U.S., for example.