Second quarter results are coming out for big internet retailers, and the industry seems to be in great shape. Amazon reported $78 million in profit on $2.89 billion sales. A year ago, they reported $22 million in profit on $2.14 billion in sales.
Amazon CEO Jeff Bezos attributes this 255% increase in net income largely to Amazon Prime. Amazon Prime is a membership program that costs $79/year. Members get free second day shipping and overnight shipping for only $3.99.
Being one of those people who always order at least $25 from Amazon in order to get the free shipping, I can’t really fathom why many people would spend $80/year to get their books a day or two sooner. But, I am obviously wrong, and Amazon has again demonstrated why they are the top e-tailer on the web. I can only imagine how much the lifetime value of customers participating in that program has jumped.