Amazon may be hitting a peak, but going international may boost Prime

Amazon can seemingly do no wrong, with the company constantly disrupting major industries, and consumers increasingly integrating its offerings into every aspect of their daily lives.

Just this week, Amazon sent pharmacy stocks reeling after it announced it was buying online pharmacy PillPack. The market’s reaction underscored how Amazon’s entry into key sectors leaves the competition scrambling to adjust, and increased speculation that the retail giant is poised to upend yet another industry.

“This acquisition could be the launchpad for the long-feared broader entry of Amazon into retail pharmacy space, just months after news reports had brought some relief that Amazon was not ready yet to enter drug distribution,” Evercore ISI told its clients in a research note Thursday.

By all appearances, the Amazon juggernaut can’t be slowed. However, a recent report suggests Amazon’s growth may actually be reaching a plateau — creating a potential opening for competitors trying to bring the behemoth down.

According to data from RBC’s latest online shopping survey, Amazon Prime membership growth is showing signs of slowing down. At 55 percent, just over half of the U.S. is subscribed to Prime, Amazon’s recurring subscription service, RBC said — a level consistent with 2017’s figures.

“This was the first year when Prime penetration didn’t rise. A surprising result, which implies Prime expansion is likely mostly/totally driven by international markets,” said Mark Mahaney, RBC’s lead internet analyst.

To be sure, Amazon remains the retailer to beat, even though it hiked the Prime membership price by 20 percent in May to $119. Immediately after, the stock hit new highs as investors bet on Amazon maintaining its lead with consumers and the competition.

However, RBC’s data underscore how potentially slowing growth in the U.S. could undermine Amazon’s “flywheel” effect — a bet that lower prices and membership perks will draw in more customers — and lead to more Prime-eligible items and sellers. That virtuous cycle makes Prime more valuable, and attracts ever more subscribers.

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