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Wednesday, Oct 01, 2014
Business News

Mullins: Hooked on Amazon Prime? Easy to see why

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Amazon Prime is like crack, people warn me in hushed, cautionary tones. Once you try it, you’re hooked.

I personally have not signed up for Amazon’s premiere, super-duper, fancy-dancy, wave-o’-the-future membership program, even though I’m a frequent customer. But I’m fascinated by the transformation people talk about once they do. “Oh, you’ll see,” they tell me, “you’ll see.”

On its face, Prime offers two simple things: Free two-day shipping on most purchases, and access to streaming movies and TV shows. All for $80 a year. Whether or not people need two-day shipping, a few things seem to happen once they sign up.

Their perception of all that Amazon offers changes, and their perception of their whole spending lives change, as well. The mere prospect of fast, free shipping on anything they buy turns them into Amazon addicts. Why not use Amazon, they figure. Instead of driving to the mall, Amazon becomes something of a private shopping service for them — accessible anytime people have their PC, laptop, phone or tablet around.

One friend confided to me that they’ve shifted so much of their spending to Prime that when the UPS truck drives past their house at night without stopping, they figure it must be a mistake. “What’s wrong?” they wonder, looking forlornly out the front door. “Why didn’t they stop?”

Clothes, sporting goods, tools, books, cooking gear, cosmetics, toys and nearly anything else. To them, “the mall” becomes merely a social venue where teenagers see friends and you can grab a Cinnabon. (Mmmm, Cinnabon.)

In my years of covering consumer trends, I’ve seen this kind of starry-eyed wonder before.

It happened years ago to people when they first signed up for Netflix’s DVD-by-mail service. Why drive to Blockbuster (which is basically defunct now). It happened when people made their first Skype phone call. Why pay for a phone line (which is fast going the way of the Fax machine)? It happened when I first deposited a paper check via my cellphone camera. Why would I ever go to a bank, except for an ATM, I wondered?

Last holiday season, Amazon cleaned up with Prime. More than a million people signed up during the third week of December. Granted, signup is free, and after a free 30-day trial you can cancel, but a lot of companies would absolutely kill for a million new customers of anything. So many people rushed to Amazon Prime that both UPS and FedEx basically broke down under the load of surprise two-day packages. It takes something pretty big to choke FedEx and UPS.

Lest you think this is just another “isn’t Amazon amazing” story, let me add this. There’s a powerful consumer trend wave behind this: The rise of what I call “membership retail.”

Companies of all sorts are launching programs to turn “customers” into “members” of a special club, offering perks and deals. Restaurants, retailers, online merchants, pretty much anybody.

Take the restaurant Lee Roy Selmon’s. It launched a membership program last year that awards points for each visit and each dollar spent. It was a huge hit and significantly boosted return traffic by those customers.

Just try walking out of a Banana Republic without someone trying to enroll you in their points program. Best Buy has a membership program, too, so if you spend a bazillion dollars, you can eventually buy more stuff there too? Wa-hoo!!

We’re big fans of the AMC Stubs card, and we’ve developed a disproportional fixation on how many more points we need to “earn” a free soda. (You may now insert your dismissive allusion to the royal class doling out trinkets to the masses.)

As for Amazon, they’re betting big on Prime, and not just for selling physical stuff. Prime is the channel by which Amazon is streaming TV shows for which they have the exclusive re-broadcast rights, like “Downton Abby.” And Prime is the channel for shows that Amazon funds and produces outright, including the political comedy “Alpha House,” which shows the bachelor life of senators who room together in D.C.

And as I write these words, there’s buzz on Wall Street that Amazon is approaching big entertainment companies about re-broadcasting those companies’ TV programs for Amazon’s own pay-TV service. Instead of subscribing monthly to a cable company, you’d just use a broadband connection to flip through channels on Amazon. We’ll have to see how this works with new “net neutrality” rules that basically let broadband providers pick and choose which websites and streaming services they’ll let run fast or sloooooowwwww.

Oh, and there’s the potential that Amazon will deliver groceries around here, too. And in a big way, all this started with lots of brown boxes delivered with two-day free shipping, and those dreamy-eyed Amazon Prime members who warn me it’s like crack.

Meanwhile, here’s other news on retail, restaurants and shopping around town.

♦ Many people already pay their cellphone bills with credit cards, but T-Mobile is closing the loop. T-Mobile will soon issue its own card. It’s a “stored value” card, and through it, T-Mobile is almost becoming a virtual bank. Users can cash checks with the T-Mobile banking app (that’s a shot across Amscot’s bow) and use the card like a credit card at shops, restaurants and elsewhere. T-Mobile promises “$0 cost or reduced fee services,” so we’ll have to see how the fine print works out. But this is a big step toward helping the “unbanked” population who, for whatever reason, keep going to payday loan places to cash paychecks. I checked with Verizon Wireless. They don’t have a similar project. I checked with AT&T Wireless. They politely declined to be part of the story. Read into that diplomatic reply what you will.

♦ Life Time Fitness is building a slew of health clubs/spas in Florida. But they’re doing more than that. The upscale fitness chain is buying marathons — or at least the event production companies that organize them. Life Time just bought US Road Sports & Entertainment Group, which organizes marathons in Miami, Sarasota, Fort Lauderdale, Palm Beach and other U.S. cities. Here in Tampa, Life Time is building a huge gym, spa and restaurant at the International Plaza mall.

♦ Here’s some news about what your kids will be asking for next. Virtual reality greeting cards. A while ago, I wrote about an Ikea project that lets you put their catalog on the floor and point your phone camera at it, and the screen would display what the furniture would look like in reality. These “instaMOTION” brand cards go the same route, and for a birthday party or Valentine’s Day party invitation, they’ll “pop up” virtual cartoon characters on your phone. So expect some tiny fingers pulling on your iPhone.

♦ I mentioned Amazon getting into more streaming media … here’s another example of the trend’s horsepower. Fox just announced they’ll stream the Super Bowl via their mobile app, so you’re already seeing some amazing “decoupling” of the sports/cable/advertising industrial complex.

rmullins@tampatrib.com

(813) 259-7919

Twitter: @DailyDeadline

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