Amazon.com Inc. (NASDAQ:AMZN), the biggest online seller in the world of IT, is striving to make its prime service recognized. Right now, the company has been selling everything from shampoo to medicines and books to gadgets; however, its future depends on its Prime Service.

The company has recently missed earnings with an EPS of $0.27 when analyst expects $0.15.  Jeff Bezo sacrifices the company’s profitability for innovation and growth.  This attitude is the kind of leadership needed to bring about major developments, such as drone delivery units, amazon lockers, and home grocery deliveries.  Over the years, the company has grown year over year in stock price as the market recognizes Amazon increased revenue and their eventual profitability.

Ross Sandler, the analyst at Deutsche Bank, gave the company’s stocks a rating of ‘buy’ with a target price of $400. When asked about the ratings, the analyst said that Prime is no doubt the most significant growth trend as it represents around 50 percent of the company’s merchandise volume.

Ross further commented that Prime has a total of 32 million customers, and the company has never had this many clients in the past. The company will have a growth rate of 45 percent if the number of customers is in fact greater than 30 million. Even though Prime has a negative impact on the margins of Amazon.com Inc. (NASDAQ:AMZN), but its huge merchandise volume outweighs the compression in margins.

Coming to the estimates of Consumer Intelligence Research Partners, the research firm has also estimated a rough figure of 32 million. According to a research report released by CIRP in June, the company enjoyed around 27 million of the domestic clients; bringing the growth rate to 44 percent. The company has a remarkable loyalty rate since 95 percent of the surveyed said that they will ‘probably’ or ‘definitely’ renew the membership card.

According to Ross Sandler, the service has the potential to gain around 100 million customers by the end of 2020. Prime service, a two day delivery service free of any costs, was introduced in 2005 and since then, it has expanded and extended to other operations as well. If the service indeed draws around 100 million clients by 2020, it will be covering over 50 percent of the company’s market capitalization. Interesting feature about the service is that it grants access to movies, shows, Kindle libraries and streaming service of Amazon as well. The service now costs $99/ year, in addition to the two-day free delivery service.

According to the latest estimates, customers using Prime order merchandise worth $2500 or more over a period of one year whereas the non-prime customers order goods that are worth just $330 or more- meaning that Prime is around 8 times stronger when it comes to merchandise volume.

There is a chance that Prime’s margins will remain low for some years; however, the company’s aim is to make this service an important part of Amazon. On the last trade day, July 24, 2013, Amazon. Com Inc (NASDAQ:AMZN) opened its stocks at a price of $359.98 and closed at a price of $358.61, after hitting the highest figures of $364.85. The company has a market capitalization of $165.02 billion and a P/E (price to earnings) ratio of 561.63.As far as company’s 52 week high and 52 week low are concerned, the figures are reported to be around $408.06 and $279.33 respectively. The company has an estimated EPS of $3.42 for the current year.

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