Amazon Prime Members Could Hit 275 Million

One of the biggest draws for some Amazon.com (NASDAQ:AMZN) shoppers is the company's Prime loyalty program. What began as essentially free two-day shipping now provides a host of benefits including free streaming music and video, e-books, and exclusive savings at Whole Foods. Members are also granted entry to Amazon's annual members-only Prime Day sale and early access to lightning deals -- sales of certain items "while supplies last."

This article originally appeared in the Motley Fool.

It turns out that Prime members spend considerably more than the average shopper, becoming some of Amazon's best customers. One analyst says those valuable Prime subscribers are set to more than double over the next decade, bringing their ranks to 275 million.

A bold prediction...

Citi analyst Mark May has done the math, and believes that Amazon Prime subscribers are increasing by some 35% to 40% annually. Amazon doesn't disclose this info, though CEO Jeff Bezos did reveal earlier this year that Prime has topped 100 million members. May estimates that the subscriber base could grow to more than 275 million within the coming 10 years. He also calculated that Amazon will reap more than $500 billion in Prime-related gross sales each year within a decade, and reach total gross sales of $633 billion by 2029.

As a result of these estimates, Citi raised its 12-month price target on the stock to $2,250, more than 17% higher than the current level -- and that's on top of the 64% Amazon's stock has gained already this year.

"We remain positive on Amazon shares and view Amazon's large and growing global Prime member base as not only a source of recurring revenue but a key reason why brands and third-party sellers are increasingly relying on Amazon's marketplace," May wrote. "There are many benefits of having highly satisfied membership-based customers, but a simple metric is that most studies suggest Prime members spend twice as much as non-Prime members."

...that might be conservative

May's estimates regarding Prime customer spending habits may even be conservative. Research by Consumer Intelligence Research Partners suggests that Prime subcribers spend $1,400 per year, on average, compared to just $600 per year for non-member customers. The study also found that "Prime members with the longest tenure spend more, as customers with memberships longer than three years spend $1,500 per year."

Prime subscribers may make up roughly 80% of households in the U.S. -- the online retailer's most established market -- by 2029. The program has expanded internationally to 16 countries, but May believes it will take time for Prime to achieve significant penetration in those geographies. That said, he expects that international Prime members are likely spending an estimated $35 to $40 per month on Amazon, compared to about $120 per month for subscribers in the U.S.

So many opportunities, so little time

There are lots of reasons to like Amazon, from its growing cadre of Prime members to its thriving business-to-business portal, and from its blooming advertising business to its industry-leading cloud computing service.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.