Case 3: Amazon.com's Mom Program c-3

The Amazon Mom membership program (www.amazon.com/ gp/mom/signup/info) began in fall 2010 after a successful test market in June 2010. The Amazon Mom program is targeted at parents, relatives (such as grandparents, aunts, and uncles), and caretakers who regularly purchase such goods as diapers and baby wipes for babies and young infants. Because these items are bought with high frequency, Amazon.com views this as a major opportunity to "lock in" these consumers to a pattern of regular purchasing at Amazon.com.

Even though Amazon.com (www.amazon.com) customizes its home page for any customer based on his or her purchase history, Amazon Mom goes a step further by suggest- ing related products. An Amazon Mom member, for example, may see selections of baby monitors (which transmit sounds from a baby's room to another area), nursery furniture, and a full selection of diapers.

Amazon.com sees Amazon Mom as a gateway to make consumers aware of and experience the benefits associated with Amazon's Prime and Subscribe & Save programs. Under the Amazon Prime program (www.amazon.com/ prime), members pay a $79 yearly fee for unlimited two-day shipping with no minimum purchase requirement. Amazon Mom members receive an additional month of Amazon Prime every time they purchase $25 of baby products. Amazon Prime is advantageous to Amazon.com because it rewards the most loyal customers. At the same time, Amazon Prime encourages members to purchase more goods through Amazon.com. According to a former Amazon Prime team member, Prime membership "was never about the $79. It was really about changing people's mentality so they wouldn't shop anywhere else."

Subscribe & Save (www.amazon.com/gp/subscribe-and- save/details) is an Amazon.com program that provides an ad- ditional discount to consumers who elect to purchase an item at selected intervals. Subscribe & Save members also receive free shipping on every shipment. While Subscribe & Save was originally targeted at consumer purchases of laundry supplies, coffees, and paper goods, Amazon Mom extends this program to products aimed at babies and infants. Amazon.com hopes that the Amazon Mom program will yield continual use of its Subscribe & Save program as both children and their parents get older.

Amazon.com believes Amazon Mom is an effective strategy to attract parents, relatives, and caretakers who often have little time and patience for purchasing consumables. For many young parents, the purchase of diapers, baby wipes, and other consumables is viewed as a routine purchase with little perceived risk. In addition, many Amazon Mom mem- bers fear running out of these supplies, and see home delivery as a positive alternative to carrying several boxes of diapers at a time.

Some analysts believe that Amazon.com's strategy for Amazon Mom is to lure consumers with low-price products such as diapers and then encourage them to purchase goods with higher profit margins, such as car seats. An analysis of Amazon Mom's prices for two popular brands of diapers Huggies Snug & Dry and Pampers Cruisers Dry Maxfound that Amazon.com's price with its 30 percent discount was only 5 to 7 cents less than the next lowest-priced retailer, Sam's Club (www.samsclub.com).

Questions

1. Discuss the pros and cons of Amazon Mom's membership program from a consumer's perspective.

2. Evaluate the pros and cons of Amazon Mom's membership program from Amazon's perspective.

3. List appropriate products for Amazon to market with its Subscribe & Save program.

4. Evaluate the pros and cons of Amazon Mom's low price strategy.