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Amazon Roundup: Prime Reaches 100 Million, Best Buy Deal & More

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Here are the top Amazon (AMZN - Free Report) stories from last week-

Amazon Prime's 100 Million Subscribers

In his annual shareholder letter, company founder Jeff Bezos revealed that Amazon now has 100 million subscribers – that’s actual paying customers, not people who are trying out the service. Although Prime itself doesn’t cost the same for everyone: students get concessions while monthly subscribers end up paying more than the annual charge of $99.

The number doesn’t come as a huge surprise, since Consumer Intelligence Research estimated last year that as of September 30, Amazon had 90 million Prime members in the U.S. alone. And that these members were spending an average $1,300 a year, roughly double the $700 spent by other customers.

But Prime is having the same effect in international markets as well. As a Morningstar analyst says, "What we’re seeing in Europe and other markets is similar to what we saw in the US between 2010 and 2014. People see value in Prime memberships in terms of shipping speed and content. It’s important to investors because membership retention rates are north of 90%."

In India, Amazon signed on more Prime subscribers in its first year than any other previous geography in company history on the basis of 40 million local products. Amazon sold 5 billion items globally through Prime in 2017.

Amazon’s Prime membership is a solid growth tool. It’s a perennial loyalty program rolled into the shopping experience that gets better the more you shop. Bezos had earlier said that you’re going to feel irresponsible for not using Prime, indicating that he was going to stuff many things into it, which is exactly what he has done. So today, you not only get to shop what you want, but also gain access to things like Prime videos, songs and e-books.

So Prime is a leading digital subscription and compares well with others in the space including Netflix, which has 125 million subscribers, HBO 142 million, Spotify 71 million users, Hulu 17 million and Tinder 3 million.

Amazon Has Deal with Best Buy  

Amazon and Best Buy (BBY - Free Report) have signed a deal that will improve distribution for both.

According to the terms, Best Buy will showcase and sell 10-11 high-definition and 4K TVs made by Toshiba and Best Buy’s house brand Insignia running Amazon’s Fire TV operating system in its 1000+ stores. The Fire TVs as they will be called will offer programming from cable networks as well as streaming services like Amazon's Prime Video, Netflix, HBO, PlayStation Vue and Hulu. The partnership ends Best Buy’s agreement with Roku, which used to live inside the Insignia TVs before this deal.  

For Amazon, the physical presence was necessary because TVs are the kind of things people want to see and interact with before buying. All the better that the TVs can be paired with Amazon smart speakers and that the remotes have Alexa integration, because this puts Amazon in the center of your living room.

For Best Buy, which gets preferred supplier status on Amazon, it means access to the platform’s huge user base. It will also lead to higher traffic in-store and customers coming in to buy a TV may end up buying other things as well (including iPhones, Android phones and other products that compete with Amazon’s).

International Shopping Experience

With this feature, people living outside the U.S. gain access to 45 million items that will be shipped to them from the U.S. The feature is available in 5 languages including English, Spanish, Simplified Chinese, German and Brazilian Portuguese, on both mobile browser and mobile app within the Amazon Shopping App for iOS and Android mobile devices. It allows you to shop in 25 currencies.

Amazon Government Contract

While the Pentagon has denied it, Amazon does appear to be the front runner to receive a $10 billion contract to provide cloud services to the government’s Joint Enterprise Defense Infrastructure (JEDI) project. That’s because its cloud services have been certified for the highest possible security level and Amazon is already doing work for the government, including the hosting of top-secret data from the Central Intelligence Agency (CIA) and government contractors like Boeing (BA - Free Report) . Last week, the Pentagon released the second draft request for proposal, with the final proposal expected next month.  

Amazon Will Stream U.S. Open Tennis

Amazon has confirmed a five-year deal with the United States Tennis Association (USTA) to stream the games to viewers in the UK and Ireland starting this year. Amazon forked out $40 million (£30 million) to buy the rights for Prime video. Discovery-owned Eurosport, which previously also owned the UK and Ireland rights, bought the rights to stream the games to the rest of Europe for another five years.

 

 

Amazon has a Zacks Rank #1 (Strong Buy), as does other players in the space including IAC/Interactive Corp. (IAC - Free Report) and Stamps.com (STMP - Free Report) . Internet commerce peers Petmed Express (PETS - Free Report) and Secoo Holding Ltd. (SECO - Free Report) are Zacks #2 (Buy) ranked stocks that are therefore also worth buying.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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