One of the biggest reasons behind Amazon's (AMZN 0.58%) success is the attractiveness of its Prime membership. More than 200 million people have signed up for it. When you consider the value it offers, including free and fast shipping, exclusive discounts, photo storage, video streaming, and other perks, it's easy to see why it's one of the few subscriptions that is a no-brainer for consumers these days.
Now, Amazon is adding to that list, giving consumers even more of a reason to sign up for Prime -- and that's affordable healthcare.
A discount on One Medical membership
Amazon is giving consumers even more of a reason to sign up for its Prime membership by offering a discount to One Medical, the primary care company that it acquired earlier this year. One Medical's annual membership costs $199 per year, but if you're a Prime subscriber, you can sign up for just $99.
With the membership, users can access virtual care around the clock. One Medical also has offices so patients can see physicians in person. And Amazon says the primary care provider does accept "most major health insurance plans."
While on its own, this may not be a significant enough benefit for consumers to sign up for Prime, it can provide an added incentive for people who may be on the fence.
It's not the only healthcare benefit
Earlier this year, Amazon also unveiled RxPass through Amazon Pharmacy. For $5 per month, Prime members can obtain all their eligible generic medications with RxPass, and they are also delivered free of charge. Through Amazon Pharmacy, patients can access medications that treat over 80 different conditions, including high blood pressure and anxiety.
A big incentive to increase Prime subscribers
Prime subscribers love spending on Amazon. According to a 2023 data survey from Upgraded Points, Prime members spend $110 per month on Amazon. That's almost three times as much as non-members do: $38.
The membership costs $14.99 per month or $139 if consumers pay for an entire year at once. To justify that subscription, consumers need to know that they are getting their money's worth with it, which explains why spending on Amazon would be higher than for people who haven't signed up for Prime.
Plus, if you've got the membership and you don't have to pay for fast and free shipping, it may be enticing to buy online rather than having to drive to a local store and deal with traffic, lineups, and finding the item you want. Giving consumers more of a reason to sign up for Prime can lead to more revenue growth for Amazon.
Amazon's growth rate has been slowing
Amazon continues to get bigger and more diverse. But its bread and butter is e-commerce, and increasing the number of Prime members is a key way that the company can generate more revenue. Over the past five years, Amazon's quarterly revenue has grown at an average of 21%. But that's mainly due to the uptick in spending during the early stages of the pandemic. Since then, things have slowed down significantly.
AMZN Revenue (Quarterly YOY Growth) data by YCharts.
By getting more members to sign up for Prime, Amazon can potentially turn this thing around and give its top line a boost. For a stock that trades at 76 times its trailing earnings, investors are going to be expecting much more than just 12% growth from the business.
Should you buy Amazon stock?
Amazon may be a leading tech and e-commerce giant, but its valuation is a bit pricey for the growth that it has been generating of late.
However, with a constant pursuit of innovation and by always finding ways to create value for its consumers, Amazon can still unlock more growth opportunities in the future. Diving deeper into healthcare and giving people more of a reason to sign up for Prime are examples of how the company can still get bigger and better in the long run.
The stock's high valuation could make it difficult for Amazon to generate any significant returns in the near term, but if you're willing to buy and hold the stock for five years or longer, Amazon can still make for a fantastic investment to put into your portfolio today.
