There's a reason you have to be a member of Prime to take advantage of Amazon's great deals today — because Prime members are the ultimate customer that CEO Jeff Bezos strives for, one analyst told CNBC's "Squawk on the Street" on Tuesday.
Online commerce company Amazon doled out huge discounts and perks to members of its Prime service Tuesday, as part of its annual "Prime Day" event. Shares of Amazon hit an all-time high on Tuesday, on a day the markets were trading at record levels, before paring gains after e-commerce software company ChannelAdvisor estimated that Prime Day sales were in line with 2015 so far.
But while other retailers are offering deals and discounts — no membership needed — to piggyback off Prime Day, that doesn't rival the power of a Prime membership, said Neil Doshi, managing director and senior analyst at Mizuho Securities.
Jeff Bezos speaking at the 2016 Code ConferenceAsa Mathat | Vox Media
"Not only do you get free two-day shipping on almost any good that's on Prime, you get free movies, free music and free e-books," Doshi said. "Free shipping alone, I don't think is going to cause people to jump from Amazon to Walmart or to go to Kohl's."
Amazon could add 300,000 to 400,000 new subscribers through Prime Day, Doshi estimated. Prime participants spend an average $1,200 per year on Amazon, compared with $500 for nonmembers, Consumer Intelligence Research Partners said.
"They're super valuable — they've arguably been driving the growth of Amazon the past couple of years," said John Blackledge, managing director and senior equity research analyst at Cowen and Company.
Prime members buy four categories per month, versus two categories for non-Prime members, by Cowen's estimates. In particular, Prime members are likely driving growth in Amazon's apparel and consumables business, Blackledge said, echoing Morgan Stanley's research on the future of Amazon.
"We've called Amazon to be the number one apparel retailer in the U.S. by 2017, and the number two consumables retailer by 2018 in the U.S.," Blackledge said. "These are huge, nontraditional verticals for Amazon that are driving growth now, and we think, for the next five to 10 years."
Mizuho Securities makes a market in Amazon, and Amazon is an investment banking client. Cowen and Company also makes a market in Amazon stock.
