Is Amazon Prime still worth it without grocery perks?

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Exclusive grocery access is the latest Prime benefit to be rescinded

As of last week, access to groceries on Amazon is no longer exclusive to Prime subscribers.

Making the perk available to all is a “pretty meaningful change”, says the company’s VP, Amazon Fresh international, Ganesh Rao.

The rationale is clear: Amazon is trying to convince people to shop for food on its platform. And restricting use is “just another barrier to those wanting to engage”, says Rao.

But what about those paying £8.99 a month for the privilege? And what next for Prime?

“The once perceived exclusivity factor of Prime has certainly worn off,” says former Amazon senior category manager turned vendor adviser Martin Heubel.

The opening up of grocery to all “underlines that the channel’s performance remains behind expectations of Amazon’s leadership” and is a “smart move”, Heubel says. But it’s also “another sign Prime has reached a tipping point”.

Prime perks devalued

It’s not the first time Amazon has picked off a Prime perk, having introduced ads to Prime Video in late January. While Netflix and Disney have also introduced ads, these are on cheaper-than-standard plans, while Amazon expects £2.99 a month on top of the subscription to go ad-free.

Though Prime Video’s original content is indeed strong – series three of Clarkson’s Farm recently set a new streaming service audience record – the ads have not gone down well.

Their introduction led to “a notable subscriber exodus” says Kantar Worldpanel global insights director Dominic Sunnebo. “Key metrics, including share of new subscribers, total number of subscribers and proportion of Prime users engaging with Prime Video all fell significantly in the first quarter of 2024.”

Subscriber churn was the highest at the start of this year since Kantar started measuring the metric in 2020.

Amazon says that Prime membership “continues to grow” in the UK, ”with Q1 2024 membership up year on year and strong customer retention”.

“Prime Video in the UK continues to see high customer engagement, with the number of people streaming growing year on year,” a spokeswoman told The Grocer.

SINGLE USE

Source: Prime Video

Clarkson’s Farm recently set a new streaming service audience record, but introducing ads hasn’t gone down well with subscribers

Of course, these add-on Prime benefits – others include lower Deliveroo and HelloFresh delivery fees, and Spotify alternative Amazon Music – are mainly gravy on the main reason for subscribing. That is, free, one-day delivery on millions of items with no minimum order.

But even this benefit is being devalued. “It’s easy enough to avoid needing a Prime membership by consolidating orders so they exceed the minimum order threshold for free delivery,” says Miya Knights, author of a book on Amazon. Standard delivery is free to non-members on orders over £25, a fact to which many are getting wise.

“Even if you’re not a Prime member, most orders arrive faster than Amazon indicates, especially if you live in metropolitan areas like London or Manchester,” adds Heubel.

But Prime is not being completely ignored by Amazon. This month, it will launch ‘Prime Member Deals’ on grocery, promising “incredible savings” and promotions on hundreds of products both online and in store. There are also lower thresholds for Prime members on basket sizes qualifying for free two-hour delivery slots.

Indeed, Heubel argues that “once members take advantage of more than the available retail benefits, Prime still offers great value for most users, especially if they skip alternative offerings such as a Netflix or Spotify subscription and use Amazon Video and Amazon Music”.

But “all in all, it’s become harder to discover the value of Prime” Heubel adds.

For Knights, Amazon has “taken its eye off the ball” with Prime.

In the UK, membership may well have reached “saturation point”, she believes. Indeed, according to Ofcom, it has plateaued at around 45% of UK households since 2021.

“It’s too busy looking to grow its grocery, fashion and ads businesses,” Knights says. “I imagine it will let Prime tick over without needing to add any further value until it either has to raise prices again, or needs to address any serious churn.”

Prime, it seems, may be getting past its prime.