Amazon Prime – An Employee Idea that Produced 5 Billion in Revenue in Q3 2019

Coby Skonord|
January 19, 2021

I, along with most of the people reading this article have a subscription to Amazon Prime. It’s transformed the way that we shop, purchase, and receive everything from computers to toothpaste. It has truly redefined what “on demand convenience” means. But, did you know that Amazon Prime was actually an idea submitted by an Amazon employee?

Amazon’s goal was to find a new type of customer loyalty program that would radically change the retail industry. Instead of going to a small group of external consultants or to their marketing team, Amazon opened the challenge to the entire workforce. Employees at Amazon, regardless of their role or title were encouraged to submit their ideas in a digital employee-suggestion box.

The Best Ideas Come from the Places You Least Expect

Conventional wisdom would say that the idea for Amazon Prime would come from one of a few departments, such as sales, marketing, or finance, but this wasn’t the case. A software engineer named Charlie Ward came up with an idea to offer free shipping in exchange for a flat annual fee that eventually became known as “Amazon Prime.”

This provides a classic example of the benefits of cross-departmental problem solving and provides validation that the people farthest away from a problem often have the most novel and disruptive ideas on ways to overcome it. Learn more about the value of bottom up vs. top down communication.

Results and Impact of Amazon Prime

Since the initial rollout of Prime in 2005, here are a few statistics on its profound impact on Amazon’s growth –

  • 70% of Americans with incomes of $150,000 or more who shop online have Amazon Prime memberships.  
  • Amazon Prime international customers will grow at a 56% compounded annual growth rate between 2016 and 2018. 
  • 51% of US households will be Amazon Prime subscribers in 2018, up from 45% in 2017 with Prime subscribers spending up to 4.6 times more than non-prime customers. 
  • Prime members increase their purchases on the site by about 150% after they join and may be responsible for as much as 20% of amazon’s overall sales in the US. 
  • Because consumers want to get the most for their $79.00 investment, they begin to habitually check Amazon before purchasing a product elsewhere, fundamentally changing consumer habits. 

Implementing an Employee Suggestion Program Like Amazon’s Isn’t Rocket Science

The moral of the story? Don’t doubt the potential of your employees to be substantial contributors to innovation at your organization. In todays fast paced business environment, the importance of capturing and actioning employee ideas will only become more critical to your organizations long-term success.

If you’re not collecting and encouraging employee ideas today, what opportunities to drive growth and improve customer experience could your organization be missing out on?

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