Amazon launches shopping-only Prime tier to take on Flipkart VIP

The latest launch comes days after Moneycontrol reported that rival Flipkart has introduced VIP, its subscription model priced at Rs 499, to attract Amazon Prime-like customers

Amazon is rolling out a new variant of its Prime membership programme for Android users in India in what appears to be yet another move to take on rivals like Flipkart. Titled Prime Shopping Edition, it is available to users at Rs 399 per year and offers free shipping, one-day deliveries and other shopping-related benefits that Amazon Prime users get.

Prime Video, Music, Reading, Gaming and other entertainment offerings will not be available as a part of this. The Seattle-based e-commerce giant sells Amazon Prime, which comes bundled with entertainment offerings, for Rs 1,499 or sometimes even at Rs 999 during offers.

The latest launch comes days after Moneycontrol reported that rival Flipkart has introduced VIP, its subscription model priced at Rs 499, to attract Amazon Prime-like customers. Flipkart VIP, however, is focusing only on shoppers in the metro cities like Delhi, Bengaluru, Mumbai and the like, where Amazon already sits pretty.

"Prime is being adopted all across India, and not just in metro cities. We're seeing a lot of Prime customer sign ups from Tier 2 and Tier 3 cities… and they're probably doing this because the wide assortment of products is important for them. They can't find it elsewhere," Saurabh Srivastava, Vice President, Amazon India, told Moneycontrol.

As per the terms and conditions, the Prime Shopping Edition tier is only available on the Amazon app or mobile browser on Android devices. The move to target Android customers is understandable as there are over 650 million smartphone users in India with more than 85 percent of users on Android devices.

It is also unclear how long the offer will be live, and if it is only limited to the Great Indian Festival (GIF).

This is not Amazon’s first foray into unbundling the Prime offering. A year ago, it launched a Prime Video Mobile edition plan for Rs 599 per year.

The launch of Prime Shopping Edition comes a day before the festive season sale goes live and the two e-commerce giants will be going head-to-head in a hotly contested space.

Last month, Amazon had said its GIF will begin from October 10, but later tweaked its sale dates to match Flipkart’s Big Billion Days (BBD) sale, which is live from October 8.

Amazon Prime customers are the most profitable cohort for the company. Non-Prime shoppers on Amazon have an average order value (AOV) of around Rs 1,000-1,200 but Prime customers have an AOV of Rs 1,800-2,000, nearly double that of regular shoppers, according to Satish Meena, advisor to Datum Intelligence, a market research firm focused on consumer technology.

The latest launch could also be seen as Amazon’s attempt to expand its base of Prime customers in India, a key market for the tech titan. Amazon has a total of around 200 million monthly active users (MAUs) in India, of which 18-20 million are Prime users.

"Once customers see and experience this shopping benefit, they would love to become a full member and enjoy all the other things. We don’t want them to think that it's all or nothing. We want them to experience the shopping benefits and we believe that they will upgrade to full membership later," Srivastava concluded.

(With inputs from Deepsekhar Choudhury)