[orev]

Prime really was a stroke of genius. The free shipping was just the lure. Once you’ve signed up, you’re now invested in using Amazon first for everything “because I’m paying for the membership”. Then they started adding video and the other benefits, and it became such a great value even if you don’t use most of the benefits.

[chubot]

Isn't that exactly what Costco and Sam's Club did?

My dad was a member back in the 80's (and still is). Every time we wanted something, we would wait until he could get it at Costco -- which was further away than Walmart and K-mart -- "because I'm paying for the membership".

Amazon Prime is of course a lot more addictive because of the one-click, not-leaving-your-house thing. But the idea of retail memberships has been around for a long time. I think that psychology was well understood in the retail industry.

[orev]

Not exactly, no. With membership stores you need to be a member BEFORE you can shop there, which means you need to really sit down and make a decision if you want to sign up. It’s a very high cognitive cost of entry. With Amazon, you’re ALREADY shopping there, so you “might as well” add Prime for the shipping benefit. It’s a very low cognitive cost and it’s not until after you’ve joined do you realize the effect of the membership is to make you always go there first, because that’s not why you signed up.

Some may think that is a subtle difference, but I think it’s huge and the effect is clear.