Customer acquisition is an expensive endeavor.
Companies want to have an installed base of avid users — enthusiastic buyers who remain loyal, transact frequently and don’t need much outreach in terms of marketing and promotion. These customers help margins.
The “Buy Again” function is housed in a tab displayed on the app homepage and makes recommendations across a variety of categories.
There’s a conceivable on-ramp to a wider embrace of subscriptions. “Buy Again” users might find themselves hitting the button enough — on a purchase-by-purchase basis — to realize that it’s easier to pivot to Prime or “Subscribe and Save” so that items arrive automatically and regularly. Customers wouldn’t run out of a household staple and have to hit “Buy Again.”
The move comes as the company is reportedly mulling new subscription offerings in grocery and healthcare. Amazon might introduce stand-alone offerings in those segments. The company’s latest earnings results showed that subscription services revenues were up 13% year on year to $9.9 billion in the June quarter.
There’s a boon for the merchants, too, should “Buy Again” be rolled out across the Amazon universe. Amazon has been banking on the growth of third-party seller services, which include logistics and shipping. Repeat purchases could go a long way toward keeping on-platform and off-platform companies firmly loyal to Amazon.
In the latest quarter, Amazon said its third-party seller services revenues were $32.3 billion, or nearly 24% of the consolidated top line, and were up 17% year on year. A shift toward more visibility in repeat purchases, and especially subscriptions, means that inventory management can become more efficient.
Amazon seems to have incentives to recharge subscriptions. The company lost about a point in its “share” of subscriptions overall to 65% in May. Generation Z subscribers slipped by about 10%, as measured against the previous month. There has also been a dip in subscribers earning between $50,000 to $100,000 annually.
Inflation has also been a concern. Early data from Amazon’s Prime Big Deal Days event showed consumers are gravitating toward low-cost kitchen gadgets and apparel.
And while holiday spending trends have yet to be fully evident, repeat purchases are clearly on Amazon’s long-term roadmap.
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