Prime Sets Its Sights on American Express in Battle for Consumer Wallet
Prime Sets Its Sights on American Express in Battle for Consumer Wallet
It's easy to dismiss Amazon adding a Grubhub benefit to Prime as one of two things:
* Amazon getting an option to buy 2% of what is admittedly a struggling company in a competitive sector. Incidentally one that they exited sometime back (Amazon Restaurants was shut down in 2019).
* Amazon tying to coax existing Prime members to renew their memberships and buy more product from Amazon.
Both of these might be true but, this may only be part of the story. Increasingly, I feel that Amazon could be looking to untether its crown jewel, Prime, from its retail free shipping roots.... and moving more into a mainstream financial and entertainment services posture.
Something akin to AMEX Platinum.
Witness this:
* AMEX Platinum clocks in at $700/year. Currently Amazon Prime is only $139/year. That certainly seems like a lot of room to run, doesn't it?
* AMEX Platinum gives the consumer a $240 digital entertainment credit. Amazon Prime members get, well, Prime Video included. Which will include NFL Thursday Night Football for free, and perhaps NFL Sunday Ticket if Amazon wins this bid.
* Amazon offers music, gaming, and reading benefits for Prime. AMEX offers no such benefits. Although that digital entertainment credit by AMEX looks awfully similar.
* AMEX has a trusted travel portal and a $200 hotel credit. Amazon has no such offering.
* AMEX has a $155 Walmart+ Credit. How interesting does this appear now? Are you starting to believe me now? The world is taking sides.
* AMEX also offers $100 SAKS credit. I'm sure Amazon would like to shop at its marketplace though, right?
* AMEX provides a $200 Uber Eats credit (restaurant delivery). Amazon just added a similar benefit from Grubhub.
What moves could Amazon make in this kind of environment:
* Invest in a travel-oriented business. Just imagine if Amazon bought something like TripAdvisor. How much data on consumer behavior would they now control? What services could Amazon dream up from such an acquisition?
* Bundle Prime at different levels with its Credit Card suite. Why every Amazon Prime customer does not AUTOMATICALLY receive an Amazon credit card is about the largest strategic mistake I see Amazon making right now across the board. These things should be bundled together. The top level could get NFL Sunday Ticket for free.
If you're wondering what's going to happen to Amazon retail going forward, it's going to continue growing, just at a reduced pace. As Jeff Bezos always said, your margin is his opportunity. And there is a heck of a lot of margin in the credit card and financial services industries to keep chasing.
