We all know that Amazon is the online king, trying to impose its will on retailers big and small in its quest to become "The Everything Store."

A recent study by Millward Brown Digital, which monitors website traffic, offers Amazon's competitors further cause for concern.

Consider just three points that Internet Retailer shared in its article about the study:

  • The average conversion rate for shoppers at Internet Retailer Top 500 stores (i.e., the largest online merchants in North America) is 3.32%.
  • The average conversion rate for non-Prime shoppers on the Amazon website is 13%.
  • The average conversion rate for Amazon Prime members on Amazon.com during the most recently measured time period was 74%—22 times higher than the average rate of the IR Top 500.

Most retailers would hail the non-Prime member rate as an unqualified success and do everything in their power to sustain it; remarkably, the Prime rate was more than fivefold higher.

What explains this remarkable rate? Just as critically, what can you do to combat the threat by turning your shoppers into more loyal, frequent buyers?

A look at Amazon Prime offers you three tips on how to fight back.

1. Offer free shipping

Prime launched in 2005 with just one benefit: In exchange for a $79 annual fee, shoppers could get two-day shipping, at no additional charge, on practically everything they bought from Amazon. A one-benefit program might not seem all that enticing, but Prime chose its benefit extremely well. Free shipping has long been the most attractive offer available to direct-to-consumer retailers:

  • It's twice as effective in closing sales as percentage-off discounts are.
  • 88% of US consumers are more likely to shop online if they're offered free shipping.
  • 74% of shoppers cite free shipping as the top factor for improving their online shopping experiences, outpolling lower prices (50%) and same-day delivery (9%).

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image of Tom Caporaso

Tom Caporaso is the CEO of Clarus Commerce, a provider of e-commerce and subscription commerce solutions. It powers FreeShipping.com, and it customizes and manages Return Saver, co-developed with FedEx, and 2-Day Shipping by MasterCard.

LinkedIn: Tom Caporaso