Shares in e-commerce giant Amazon (AMZN) were still popular despite its customers set to be hit by the scrapping of its Prime Invitee program.
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Amazon Prime is to end the program, which allowed users to receive free shipping without paying for a subscription, on October 1. The aim is to tempt these users into paying for Prime membership instead.
Prime Perk
The Invitee program has been running for 16 years. It allows Prime subscribers to extend their free shipping perk to up to four other adults across the country, each shopping through their own accounts. Although new enrollments stopped in 2015, existing participants were allowed to keep the benefit.
Consumer Intelligence Research Partners (CIRP) estimates U.S. Prime usage at around 197 million people, while paid memberships likely range between 140 million and 160 million.
However, this change will affect hundreds of thousands—rather than millions—of people who cannot otherwise use Amazon Family to enjoy a fuller array of Prime benefits.
Now Amazon wants these users to sign up to Prime with a discounted one-year membership of $14.99. That’s understandable given the importance of Prime to the overall business.
Good things don’t last forever, however. The price will then jump back to the regular $14.99 monthly fee.
Spending Pressure
The company, it appears, is steering users toward Amazon Family, previously called Amazon Household, which lets two adults living at the same address and up to four children share Prime benefits. Unlike the Invitee program, this requires shared payment methods, though individuals can choose their own at checkout.
“The Invitee program enabled sharing of the Prime shipping benefit only and is being phased out. Fewer than 1% of U.S. Prime members are affected by this change, and the majority of invitees can instead enjoy a broad range of Prime benefits with Amazon Family, including: fast, free delivery; access to exclusive deals and shopping events like Prime Day; movies, series, and live sports with Prime Video; Amazon Music and additional digital entertainment; access to a free Grubhub+ membership; and fuel savings at more than 7,500 bp, Amoco, and participating ampm locations,” an Amazon spokesperson said. “Amazon Family enables Prime members to share a range of benefits with one adult—whether that is a spouse, family member, or roommate—and Prime Video and additional digital content like Kindle eBooks, audiobooks, and games, with up to four children in their household.”
The move comes at a challenging time for the high-profile Prime service. Last week, reports suggested that despite doubling its Prime Day discount sales event to four days this year, sign-ups in the U.S. failed to meet last year’s total and even the company’s own target.
The report said that internal company data showed that the online giant registered 5.4 million U.S. sign-ups over the 21-day run-up to Prime Day and its four-day sales event from July 8 to July 11. That was around 116,000 fewer than for the same period a year earlier and 106,000 below the company’s own goal, a roughly 2% decline for both metrics.
Back in July, Amazon said its latest Prime Day drove $24.1 billion in online spending from July 8-11, a 30% increase from the summer 2024 sales event.
Is AMZN a Good Stock to Buy Now?
On TipRanks, AMZN has a Strong Buy consensus based on 44 Buy and 1 Hold ratings. Its highest price target is $300. AMZN stock’s consensus price target is $264.13, implying a 13.69% upside.
