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This Is the Most Important Number in Business

How Amazon’s 100 million-strong Prime membership program will transform the American economy

Leon Neal/Getty Images

In his first letter to shareholders in 1998, Jeff Bezos laid out a plan for world domination. “This is Day 1 for the Internet and, if we execute well, for,” he wrote. “Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. uses the internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.” The letter, as Brad Stone reports in The Everything Store, has “become the equivalent of holy scripture inside Amazon,” evidence that Amazon emerged almost fully formed in Bezos’s imagination. The letter lays out the principles that have defined Amazon’s unprecedented success: a company devoted to customer satisfaction, long-term goals, and, above all else, relentless growth.

Twenty years later, Amazon is on the verge of becoming the world’s first trillion dollar company. It has come a long way from its beginnings as an online bookstore—it is now not only a one-stop shop where you can buy Tuscan milk, underwear, and an array of Amazon-built gadgets, but also an incredibly profitable technological services company that is making inroads into health care, banking, and brick-and-mortar retail. In Bezos’s most recent shareholder letter, he took something of a victory lap—and revealed one of the most prized secrets in the business world. Since its launch 13 years ago, Amazon has never revealed the number of paying Prime subscribers, who pay $99 a year to receive free shipping, access to streaming music and video, and steep discounts at the company’s growing number of brick-and-mortar stores. But on Wednesday, Bezos announced that the company has “exceeded 100 million paid Prime members globally.”

This is a staggering number, especially given Amazon’s concentration in the United States, where it has been estimated that over 60 percent of households have Prime memberships. (According to the Census Bureau, there are an estimated 126 million households in the United States total.) For Amazon’s shareholders, this is a big moment—further proof that the company is on the verge of fulfilling the totalizing vision laid out by its founder in the 1990s. But for everyone else, it’s a troubling figure, one that portends a future dominated by Amazon.

Why is Bezos disclosing this number now? Because of a succession of presidential tweets attacking the company, Amazon’s stock has hit some rare turbulence recently. Releasing an eye-popping figure will reassure analysts, who will continue to recommend its stock, causing its price to continue its stratospheric rise. It will also assuage concerns about some of Amazon’s pricy endeavors, including a $1 billion Lord of the Rings adaptation. And, as Jason Del Ray pointed out three years ago in a post about Amazon’s refusal to release its Prime figures, while Bezos himself has made it clear that he doesn’t care much about what Wall Street thinks, many of his employees care very much about the company’s stock price.

Finally, the announcement serves as a useful bit of publicity. Given that Prime may already have infiltrated two-thirds of American households, customer acquisition will likely be more difficult and costly going forward.

Amazon is willing to experiment to acquire those customers. Its recent efforts include discounted Prime memberships, a program for customers without credit and debit cards, and a partnership with Sprint that allows subscribers to pay a monthly Prime fee, instead of a yearly lump sum. Prime subscribers have skewed toward high-earners; with overall growth slowing, Amazon is now pushing for more low- and middle-income subscribers.

From Amazon’s perspective, the 100 million subscriber number will keep investors happy for a long while and quell concerns about slowing growth. But for everyone else, it’s a growing problem. Six months ago, Farhad Manjoo wrote that the “Frightful Five”—Amazon, Facebook, Apple, Google, and Microsoft—have grown so powerful that start-ups don’t stand a chance of competing with them. For a retail start-up, the 100 million number acts as a moat around Amazon. Even with a bright idea, how is it possible to compete with a company that just announced it has a near-monopoly on the online shopping of 40-65 percent of U.S. households? And, while e-commerce still makes up a relatively small percentage of total retail sales (the number is around ten percent), it is growing year by year. As more retail chains like Toys ‘R’ Us are driven out of business by a lethal combination of Amazon and private equity, this number will continue to rise.

The economic impact of Amazon’s growing dominance will be profound. The second-most common job in America is cashier; with retail in big trouble, these jobs and tens of thousands of sales jobs are in jeopardy. Despite the fact that Amazon is nearing a $1 trillion market capitalization, it’s highly unlikely that the company and the growing number of Amazon-dependent companies (i.e. those that produce goods sold on Amazon) can replace these jobs. “The wealthiest man in the twentieth century mastered the art of minimum-wage employees selling you stuff,” writes Scott Galloway in The Four, referring to Walmart’s Sam Walton. “The wealthiest man of the twenty-first century is mastering the science of zero-wage robots selling you stuff.”

Bezos’s dream for Amazon extends to taking a portion of every economic transaction it can, on- and offline. This explains its recent forays into health care and banking, both of which have yet to experience Silicon Valley–style disruption. For producers of goods and services, the growth of Prime should also be alarming: As Amazon gobbles up more Prime subscribers, it will become business’s most important middleman for companies that want to pay Amazon for the privilege of selling their products at cut-rate prices.

As Amazon expands its brick-and-mortar presence, its influence will only grow. Its ambitions now revolve around building “click and collect” stores—shops where customers can order items online and pick them up in-store. To get discounts in those stores, customers have to be Prime subscribers.

The majority of Bezos’s shareholder letter isn’t about any of this stuff, of course. Instead, it’s about making customers happy. “How do you stay ahead of ever-rising customer expectations?” he asks. “There’s no single way to do it—it’s a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it.” For Bezos, this is the story of Amazon: It succeeds because it strives to anticipate and meet the high expectations of its customers.

That Prime has 100 million subscribers is a testament to this focus. But that number also illustrates the growing problem of Amazon. It might make its customers happy, but its growing economic power could make their lives worse in countless other ways when they’re not one-click shopping for toilet paper.