Amazon Customers Do Pay for Shipping

Standard Shipping, Media Downloads Increased During 2014

Consumer Intelligence Research Partners (CIRP) released analysis of consumer behavior for Amazon, Inc. (NASDAQ:AMZN) customers for 2014.

These data indicate that Amazon customers increased their use of standard, paid shipping and media downloads during the first three quarters of 2014. Media downloads, including video, music, book, and game downloads, accounted for 5% of all transactions in the most recent quarter.

In the July-September 2014 quarter, 44% of Amazon customers reported using used standard shipping for their most recent purchase, compared to 28-29% in the prior two quarters (Chart 1). Amazon customers decreased their use of Free Super Saver Shipping and Amazon Prime Free Two-Day Shipping.

Chart 1: US Amazon Customer Shipping Method For Most Recent Purchase

Despite the pressure to offer free shipping, our data suggest that between standard shipping and one- and two-day express shipping, Amazon customers now pay for shipping almost half the time. It's hard to measure, yet this trend may signal growth in the Amazon Marketplace, where third party retailers sell through Amazon, and which does not offer Amazon Prime or Amazon Super Saver free shipping. It is also consistent with Amazon's overall revenue growth even as US Prime membership stabilized at 27-29 million members during 2014.

Amazon customers also increased their use of downloads for media. In the July-September 2014 quarter, 5% of customers downloaded media at their most recent purchase, compared to 3% in the prior two quarters.

Amazon not only enjoys a higher percentage of paid shipping transactions, but the percentage of direct download sales is up, too. Our analysis shows that downloads of video, music, books and games now accounts for 5% of all Amazon orders. While small relative to Amazon's retail business, it increased significantly over 2014. With no shipping and handling expense, and no physical inventory or warehouse space, these transactions are highly desirable.

CIRP bases its findings on surveys of a total of 1,500 US subjects who made a purchase at in the 90 days preceding each survey during the period from January-September 2014. For additional information, please contact CIRP.