And Prime membership is the fulcrum on which Amazon’s commerce flywheel spins. By financially—and psychologically—committing to Amazon, customers are more likely to turn to Amazon to fulfill their shopping needs. According to Consumer Intelligence Research Partners’ (CIRP) Q1 2019 report, US Prime members spend an average of $1,400 annually on Amazon vs. $600 for nonmembers. Prime members’ habitual shopping and buying behavior only adds more fuel to the fire.
“The increase in high-value traffic and sales, particularly from Amazon’s loyal Prime member audience, generates incremental product exposure, which can lead to net new customers and additional sales and, in turn, potential growth in reviews and increased organic positioning,” said Dani Nadel, president and COO of pricing intelligence firm Feedvisor. “With advertising added to the mix, the flywheel accelerates. When other customers shop on or after Prime Day and discover the products they are considering in the top search positions, as well as the positive reviews and ratings for them, the sales velocity amplifies as a result.”
It's unsurprising then, that advertising on Amazon ramped up considerably in the lead-up to Prime Day last year. According to data from marketing intelligence firm Jumpshot, the share of product listing views driven by sponsored search had its biggest increases in May and June, the two months leading up to Prime Day. The promise of a big sales boost drives sellers to lean into advertising on Amazon.