Amazon “Primes” Pump for Loyalty

As Amazon.com Inc. battles traditional retailers such as Wal-Mart Stores Inc. and digital rivals like Apple Inc.’s iTunes store, the company is raising its bet on its Amazon Prime customer-loyalty program.

Prime is so crucial to the Seattle-based company that it is willing to lose hundreds of millions of dollars a year on the program, by some analysts’ estimates. Until this year, Prime offered only quick shipping for $79 a year. But the online retailer has added services to Prime while keeping the price unchanged as a means of keeping customers loyal to Amazon’s more-profitable operations.

The cost of Prime underscores the willingness of Amazon Chief Executive Jeff Bezos to shell out money as he continues the company’s transition from an online retailer of paper books, to an Internet megamall that sells an array of products from various companies, to a seller of digital goods and even its own devices, such as the Kindle Fire tablet computer. Forrester Research estimated that about five million Fires, which begins shipping Tuesday, will be sold by the end of January. Amazon declined to reveal the Fire’s sales.

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