Amazon membership strategy: a lower-priced Prime tier's go/no-go, benefit mix and price

Amazon is weighing a cheaper membership option, called Prime Lite here, that would include only some of Prime's benefits for a fraction of the full membership fee. Decide whether Amazon should offer it. If you recommend that it should, specify the benefits Prime Lite would include and the price it should charge. ### Clarifying Questions - Is the decision for the United States, for other countries where Amazon sells, or for both? - What matters most to leadership: winning shoppers who do not pay for Prime today, keeping members who might otherwise cancel, or increasing total membership profit? - Are full Prime's price and benefits fixed, or can they change as part of this decision? ### Part 1 — Should Amazon launch it? Make a recommendation. Explain which customers a cheaper tier would serve, what Amazon would gain, what it would risk, and what evidence would confirm or overturn your call. ```hint Count both directions A cheaper tier attracts some people who do not pay for Prime today and tempts some current members to pay less. Think about who is in each group and how you would compare them. ``` #### What This Part Should Cover - The purpose of the Prime program and the specific segment a lighter tier would target. - Gains weighed against cannibalization of full Prime and other risks. - A clear decision with the conditions or test results that would confirm or reverse it. ### Part 2 — Choose the benefits Decide which Prime benefits belong in Prime Lite and which stay exclusive to full Prime, and justify each choice. ```hint Keep a reason to stay Include what changes the target segment's shopping habits, and hold back what heavy members value most so full Prime stays clearly worth its price. ``` #### What This Part Should Cover - How each benefit is judged: value to the target segment, cost to serve and effect on how often people shop. - Clear fences between the two tiers, and an upgrade path from Lite to full Prime. - How the package fits with what Amazon already sells separately, such as video on its own. ### Part 3 — Set the price Recommend a price, including monthly and annual options if you think both are needed, and explain how you would reach and validate it. ```hint Anchor, then break even Start from the prices customers already compare against, then ask how many new members Lite must bring in for each full member who switches down. ``` #### What This Part Should Cover - Reference prices: full Prime, benefits sold separately, and rival memberships. - A break-even or unit-economics view that includes downgrades. - How the price would be tested before a full rollout. ### What a Strong Answer Covers - A recommendation tied to a stated goal rather than a list of perks. - Segmentation of members and non-members by why they do or do not pay for Prime today. - Cannibalization handled explicitly, with fences and a measurable threshold for success. - Success metrics and guardrails, such as new members, order frequency, downgrade rate and profit per customer. - Consistency across the parts: the chosen segment drives both the package and the price. ### Follow-up Questions - In a test market, many full members switch down to Lite but few new members join. What do you do next? - Should Prime Lite include streaming video? Argue both sides and pick one. - How would the package and price differ in a country where Amazon's fast-delivery network is still being built?