The genius, according to Deutsche Bank, is that while the average Prime customer generates $1,000 in profit (through product purchases) over the lifetime of their relationship with the e-commerce giant, new Prime customers cost virtually nothing to acquire: Amazon spends very little on advertising these days, because the value of the Prime program is enough to draw new people in. (The real costs are in free add-ons, such as the Prime Instant Video service, but the costs of running that service, including content, don’t get bigger as Prime adds subscribers.)
via Amazon is building the retail world’s most unbreachable “moat”—and it’s called Prime – Quartz.