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Monday
Jan092012

The Cult of Amazon Prime


By Jason Calacanis

There are two types of people in the world: those with Amazon Prime and those without.

How you think about consumption, commerce and your personal time is radically different depending on if you've join the cult -- yet.

And to be clear, Prime is a cult you will be joining.

At dinner parties and business meetings, I'll frequently ask who has Prime and what they think of it. The number has grown from one or two in seven to three or four out of seven folks over the past five years. My circles tend to be people like you, which is to say more technically sophisticated (and good looking).

Prime is at a tipping point.

Amazon is doing so well with Prime it will not say how many Prime members it has acquired since the program launched in 2005. Prime launched in three other countries -- the U.K., Japan and Germany -- in 2007.

It's around 5M according to the folks debating the issue on the interwebs. My guess is it doubles every 18 months or so.

One in three American households will have Amazon Prime (or have access to Prime) in the next four years.

This is a lock because Prime let's you add up to four family members in the same household to your account (or four coworkers to shop for a related account), and because of the brilliant "Amazon Student" $39 version of Prime for folks with a valid .edu email address.

Prime will reach 30M-40M of the 120M households in the United States in the next four years (with ~20M accounts).

Like all great cults it's enormously uplifting to be a member, provided you're willing to throw away all free will and blindly accept the chosen one's world view.

Our leader is Bezos.

His, and our, worldview is that consumption is a tyrannical and meaningless chore, and that life begins after you give your consumption to a third party you can trust.


The Prime Lifestyle

If you're an Amazon Prime subscriber you spend $79 a year to get free, two-day (or faster) shipping of everything you buy with no minimums or limitations. Interestingly, the $79 a year fee has not changed since Prime launched in 2005.

Cost and time are, typically, the primary deciding factor around commerce decisions. Trust is up there as well.

Don't have a doorman or the ability to receive packages? Well, Amazon has lockers in New York City, Seattle and London where you can type in a unique code and get your package. No one even seems to know about this product, but clearly this is designed to expand the reach of Prime.

When you take the $79 leap into Prime, Amazon has you for life.

Once you're in the cult you're not leaving because leaving means you have the drudgery of having to drive to the store, finding the item you want, seeing if it's in stock and then dealing with the most horrifying experience of all: retail employees.

According to most Prime members I've talked to, one of the greatest joys of the cult membership is never again having to deal with an apathetic teenager or bitter baby boomer forced to work in retail.

Ten years ago, a normal American would make two trips to the grocery store a week, as well as weekly or so visits to a drugstore and Blockbuster. Throw in a couple of monthly visits to some combination of Circuit City, Barnes & Noble, Kmart, Walmart, Create & Barrel, TowerRecords, ComputerLand, Frys, Costco and Bed, Bath & Beyond.

Add to that quarterly or semiannual visits to clothing stores like Old Navy, Gap, Saks or Barneys.

Let's call it four to six hours of retail experiences a week, or 20 to 25 hours a month per household. Including holiday shopping you're looking at 250 hours a year you're inside a retail location experiencing some combination of time-regret, stress, boredom and/or annoyance.

Cult members understand there is not only no joy in traditional shopping, but that it's filled with annoyance and wasted time.

Cult members understand there can be joy, and time savings, associated with intelligent consumption.

Prime gives you the joy of consumption without the pain of acquisition.

Of course all of this is topped off by the fact that you implicitly trust everything Amazon does, as well as its Zappos-level customer service (including return policy). Oh wait, they own Zappos now, too.

But wait, there's more: as a Prime member you get a free Kindle book and 11K movies/TV shows (and growing) a month free.


The Prime Worldview

If you're part of the cult, brands like Netflix, UPS, USPS, Paypal, Walmart, iTunes, Barnes & Noble, iPad, HTC, Target, Targus, Logitech, Best Buy, Dell, Belkin, Random House, Harper Collins are all becoming meaningless.

These are brands that will, in the near future, be largely if not completely replaced by the Amazon brand.

The list of areas where Amazon doesn't compete keeps dwindling.

The only area I'd expect them to be where they're not is in drugs -- as in a pharmacy. Also, wines and spirits seem like a no-brainer, but I'm sure that has something to do with taxes and cross-state delivery.

Recently I bought a half-dozen of Amazon's private-label products on my Kindle Fire including a Digital SLR backpack, a Kindle Fire case and a dual USB car charger.

All were awesomely priced, instantly delivered and provided satisfying experiences.

I didn't have to think about these, I just one-clicked them into my life. And my life is now better.

I put my Listerine on automatic delivery every 60 days, and Amazon gave me 15% while taking it off my list of things to do and carry. Life is better.

My Amazon experience is now consuming content and shopping on a device they made and sold to me below their cost and shipped below cost instantly. In some cities they bring it the same day a la Kozmo (for kids who didn't grow up with Kozmo, it was instant anything from dudes on Vespas -- it was awesome).

In the future you'll be eating Amazon-branded cereal after taking your Amazon-branded vitamins while getting a text message on your Amazon phone that you're receiving delivery of your Amazon-branded flat-panel TV from an Amazon delivery truck (not UPS) before watching HBO and AMC-quality shows that Amazon made and are only available to Prime members.

It's completely possible that Amazon will buy or build a couple of cable channels, a delivery service and electronics manufacturers like HTC or Dell.  


Wrapping up

I realize that if you're not part of the Amazon Prime cult, everything I've predicted above seems far-fetched, giddy and bubbling with Scoble-like enthusiasm.

If you are a member of the Prime cult, you're nodding your head, closing your eyes and grinning with joy because you've taken back 250 wasted hours a year and freed yourself from the tyranny of choice, retail hell and buyer's regret.  

Now, the only downside to Prime's ascendancy is that it's going to wipe out tens of thousands of retail jobs that are currently filled by the least employable of our workforce.

It's not a jump to say that many of these retail jobs are filled by folks who have *already* taken a huge career nosedive from the middle class to the just-above poverty level of retail workers.

They're going to get fracked twice in 20 years: first getting knocked from the white collar or blue collar middle class to the retail working-class jobs, and then to no jobs.

I guess you can't get massive efficiency like Amazon is building without wiping out massive amounts of jobs.

And I think Amazon's massive growth will actually crater the real estate business as malls and main streets are faced with unfillable retail spaces. What do we do with the malls, turn them into office and loft spaces? university space?

Playing out the scenario, does this new flood of new office and living space put downward pressure on traditional office space?

What about the "inefficencies" in the publishing and product business, which is to say the folks working at publishing houses and consumer brand companies? If Amazon is the new book imprint and the maker of generic consumables like batteries, toilet paper and soaps, what happens in those spaces?

To many cult members, the answer might be a simple "Who cares?"

Did any of us ask for this massive consumption ecosystem to be built?

All of these malls and choices seemed fun for a while, but Prime cult members have now won their freedom. They are opting for a simpler and more efficient form of consumption.

Bottom line: as you evolve out of the manufactured, consumption society, you start to view consumption as the byproduct of living -- not the goal of living.


PS - As my editor Kirin points out, some folks seem to be converting all this retail space already [ see http://www.marketplace.org/topics/business/fallout-financial-crisis/vacant-retail-spaces-get-creative-re-use and http://online.wsj.com/article/SB10001424052970204644504576653393614129726.html ].