Amazon Prime edging out Target, Walmart

Amazon Prime (NASDAQ:AMZN) is proving to be a powerful loyalty tool, crowding out other large retailers such as Target (NYSE:TGT) and Walmart (NYSE:WMT).

Fewer than 1 percent of Prime members are likely to consider other mass retailers' websites during an online session, according to a report by Millward Brown Digital. But an Amazon shopper without Prime is eight times more likely to cross-shop, a powerful indication that Prime is effectively garnering the very loyalty it was created for.

Nearly everything Amazon does under the leadership of CEO Jeff Bezos is calculated to further strengthen the bond between the shopper and the retailer. For example: Prime Now's near-immediate delivery in a growing number of markets, exclusive original entertainment content, and of course, Prime's annual fee that keeps shoppers feeling obliged and invested in ordering from the site.

Even the new Dash button that lets Prime members re-order household items instantly (creating a new zero moment of truth that has brands and marketers quivering) provides another direct channel from shopper to website that elbows out the competition.

Amazon isn't just getting more traffic, according to the report. It's also seeing higher conversion rates, reported Forbes' Clare O'Connor. Prime members spend more on Amazon than non-prime members and convert at nearly five times the rate of non-Prime shoppers, and at higher rates than customers shopping Target and Walmart online.

Prime shoppers are also frequenting competing retail sites. Millward Brown found that during the 2014 holiday season, 8 percent of shoppers were Prime members, up from 2 percent the year before.

The good news for traditional retailers is that there is still an opportunity to capture those Prime members interested in browsing around. Price matching tools like Walmart's, which check other sites for lower prices and automatically match that price, help eliminate the need to shop comparatively. And Target's lower minimum for free shipping as well as its growing ship-to-store program are also good incentives, even for Prime members.

For more:
-See this Forbes blog post
-See this Internet Retailer story

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