Amazon Takes Social Shopping to a New Level

If you use Amazon’s “Price Check” mobile app on Saturday Dec. 10, 2011 to compare the price of an item in a brick-and-mortar store with what you can get it for at Amazon’s website, Amazon will give you a five percent break, up to $5,  if you buy that item from Amazon.com. 

What is interesting is that this is a new application of social shopping, where users contribute feedback, but where the social exchange is that users compare prices, let Amazon know, and then get value the form of discounts. In many other forms of social shopping, people post public reviews and information. 

In this case, Amazon essentially is having shoppers act as "mystery shoppers" to check out and report retail pricing at competitive outlets. Retailers do this all the time.


What is different here is the social angle, the value exchange and yet another use of mobile apps in mobile commerce.


Amazon is giving comparison shoppers a quick-and-easy way to earn up to $15 in discounts, but the promotion is making brick and mortar retailers are unhappy, of course.



The Price Check app is free and works on the iPhone and Android smartphones. To use it, you scan a product's bar code, take its picture or say or type its name. The app then gives you the Amazon price.



If you decide you'd rather buy the product from Amazon, you can put it in Amazon's online shopping cart where you'll get a discount if you complete the purchase within 24 hours.

The discount can be used on three items for a maximum of $5 off each. The deal good on electronics, toys, sports, music and DVDs sold directly by Amazon, not its third party suppliers. .

A product you're price checking also has to be an exact match to what Amazon is selling. Some might note that the promotion, though possibly enabling a shift of some sales to Amazon.com, has other value. It will feed Amazon current pricing on a wide range of products being offered by brick-and-mortar retailers all over the United States.



In fact, Amazon says on its website that the discount is “an introduction to sharing in-store advertised prices with us.”



In some cases, Amazon also will get location information as well. Qualifying products for the promotional period will have a yellow “Get deal” button next to the Amazon offer price. Amazon price check promo Dec. 10, 2011



Though it is understandable that brick and mortar retailers worry about sales volume shifting on one shopping day, they also are worried that Amazon will have a highly-efficient “mystery shopper” campaign running on Dec. 10, 2011 that no brick and mortar retailer can afford to support.



Also, some will argue, shoppers already are routinely comparing prices using their smart phones while shopping. This is just a fact of life these days, and illustrates one more way mobile commerce is being a material factor in the shopping process.

Consumers want 'free stuff' from social, marketers think they 'want to be heard' | Econsultancy

A study from the Chief Marketing Officer Council and Lithium reveals a disconnect between what senior marketers think consumers want from social media, and what people actually want.

According to the 1,300-plus consumers surveyed online globally, there was an expectation that a brand follow, like, post or preference in a social media environment would enable a person to be eligible for exclusive offers (67 percent), have the opportunity to interact with other customers who share the same experiences (60 percent) and gain access to games or contests (65 percent).


In other words, consumers view a social media follow, like, +1 or other "vote" as part of a transaction. Users assent to public support for a brand, in return for value of some sort. 

When the same question was asked to over 120 CMOs, the results were very different. The CMOs saw social engagement is more of a by-product of quality content. They tended not to believe they needed to provide incentives to foster and maintain loyalty among their followers. 


According those surveyed, customers interact with brands because they; want to be heard (41 percent) or are looking for news or information about products (40 percent) Consumers want 'free stuff' from social


It appears consumers view social engagement in much the same way they see TV commercials, namely that it is an exchange of value. In exchange for ad exposure, viewers get free, no incremental cost or subsidized access to content.


Apparently, much the same sort of thinking is at work with social engagement mechanisms. Amazon recently took advantage of that sort of thinking, offering shoppers discounts of up to $5 for checking prices of products in retail outlets, and where Amazon sells the identical item, buying from Amazon, instead. Amazon "Price Check" promotion


That's a value exchange. The user checks a price, lets Amazon know, and then gets something in return if that item is purchased on Amazon. 

Mobile Commerce Provides Lots of Value, and Not Just Transaction Fees

You might think that mobile payments are significant because they represent a potential shift of transaction fee streams from one set of providers to another.


That's true.  AITE Group, for example, in January 2010, it estimated that mobile payments would reach $214 billion in 2015, up from $16 billion in 2010, a 68 percent compound annual growth rate (CAGR) between 2010 and 2015. U.S. Mobile Payments


To the extent that all those payments will involve a transaction fee earned by some entity, you see the upside. But the value doesn't stop there. 

To give you some idea of what that can mean, eBay Chief Executive John Donahoe said otal payment volume transmitted by mobile devices through PayPal's system will be more than $3.5 billion in 2011. That helps PayPal.

But there are other ways value can be created. EBay, which owns PayPal, also uses smart phone apps like Red Laser, which lets shoppers scan bar codes to check prices online and at other retailers nearby. You might wonder what value that provides. For one thing, it allows eBay to do “comparison pricing” that retailers routinely conduct, but more efficiently, since eBay can rely on its users to do the work. PayPal mobile payments volume

Amazon.com is doing similar things, with a twist. On Dec. 10, 2011, Amazon will offer comparison shoppers a five percent discount, up to $5, on any item whose price is checked, in a retail store, using the Amazon “Price Check” app, and which is purchased on Amazon within 24 hours of the price check.

Though you might say this is a test of how much sales volume potentially can be shifted by offering such discounts, it also is a way for Amazon to gather quite a lot of infomation on retail pricing at brick and mortar locations selling the same merchandise that Amazon is selling.

Amazon Kindle Fire First Tablet to Challenge Apple iPad?

Amazon's Kindle Fire might be the first "tablet" to get serious traction, other than Apple's iPad. In fact, Evercore Partners' analyst Robert Cihra now estimates the Kindle Fire will represent half of all Android tablet sales in 2012.

Shipments of Android-based tablets are expected to jump from 19 million to 20 million units in 2011 to 44 million to 45 million units in 2012, Digitimes says. 


Some might quibble, arguing that the Kindle Fire is an e-reader, not a tablet. But you might remember Apple CEO Steve Jobs insisting 10 inch screens were a minimum requirement for tablets. Amazon will own 50% of Android tablet market in 2012


IHS iSuppli said Friday that the Kindle Fire is expected to take second place in the global media tablet business in the fourth quarter, behind Apple's iPad. 

Amazon will ship 3.9 million Kindle Fire tablets during the last three months of 2011, according to a preliminary projection from iSuppli.Amazon Kindle Fire sales

Next Amazon Kindle Fire to Feature 9-Inch Display?

Proponents disagree about the "right" screen size for a tablet or e-reader device. Apple has in public insisted only 10-inch screens are "right" for tablets. E-readers of course are another matter, but even there proponents might disagree about the "right" form factors. Best form factor?

Digitimes reports that Amazon is likely to change its product roadmap by shifting the display size of its next-generation Kindle Fire to 8.9-inch instead of 10.1-inch as originally planned, according to sources in Amazon's supply chain. 


Amazon's current 7-inch panel suppliers Chunghwa Picture Tubes (CPT) and LG Display (LGD) reportedly have begun to prepare production capacities for 8.9-inch displays, Digitimes reports. Amazon Kindle Fire 8.9-inch display


Following the launch of the 8.9-inch tablets, Amazon may also release 9.7- to 10.1-inch models in 2012.

New Nook, New Positioning?

Are there implications for Barnes & Noble as it prepares to launch its next generation of Nook e-readers? 

Some might say so, especially as Amazon’s new line of Kindles, especially the Fire, seem to be getting traction.

Up to this point, women have tended to be bigger buyers of e-readers than males. Also, Barnes & Noble is emphasizing more toys and goods for children in its retail stores.

The logical implication might be that Nook gets positioned as a device especially useful for families with children.

In the United States,  as recently as August 2011, tablet and eReader owners tended to be male and on the younger side. But according to Nielsen,  this is no longer the case.

In the third quarter of  2010, for example, 62 percent of tablet owners were under the age of 34 and only 10 percent were over the age of 55. 

By the second quarter of  2011, only 46 percent of tablet owners were under the age of 34 and the percentage of those over 55 had increased to 19 percent.

Looking at the data by gender underlines key changes in the e-reader category. Some 61 percent of all e-reader owners are now female, compared to 46 percent in the third quarter of  2010.



Smart phone owners are now evenly split between male and female and tablets remain primarily male. E-reader demographics

Content Ecosystems are Unstable: Watch Amazon

Most observers, looking at the matter of online or over the top video, and its potential impact on cable TV, telco and satellite video providers, will grasp the potential for disruption in the video business. Music and print content businesses already have been "disrupted." Could books be next?

Some will argue, with the rise of Amazon.com, and the demise of Borders, that the disruption already has happened. But some think additional far-reaching disruption is coming. After all, changes in distribution are one thing. But new patterns in product development and creation are perhaps more fundamental.

In Amazon's case, some would argue that the Amazon.com brand, back office, logistics operation and now Kindle devices allow Amazon to become a publisher, not just a distributor. To use the analogy, perhaps Apple iTunes becomes a music publisher; Google becomes a media company; Comcast becomes a studio; Verizon Wireless becomes a bank or TV network.

That should immediately strike you as a dangerous example of growing channel conflict, and you'd be right. Amazon has the distribution network and growing success in e-book publishing building blocks in place. Above all, the trade publishing houses seem to lack Amazon's ambition, some might say. Amazon might want to make money from the entire publishing chain, not just distribution.

Indeed, one reason content ecosystems are unstable is that as revenue and profit margins compress, expanding into an adjacency in any ecosystem starts to make more sense. There are potential conflicts, to be sure. But the lure of incrementally-important revenue and the ability to raise margins can be irresistible. 

Does Amazon Want to Monopolize The Entire Publishing Chain?

Should Amazon Buy Palm?

Amazon is rumored to be in “serious negotiations to buy Palm assets from HP. Some will question whether this makes sense for Amazon. Palm's webOS has been highly regarded, but has failed to get market traction.

Whether Amazon could do better, or whether it should not simply continue to use Android, are legitimate questions. But some might argue most of the value is in Palm's intellectual property portfolio.

And that could be important if Amazon believes it will, in the future, be competing with Apple, not with Barnes & Noble or eBay. As recent events have shown, IP ownership is crucial in the new mobile business.

Amazon's interest in Palm

Devices are Gateways to Services, Content and Software

“In the modern era of consumer electronics devices, if you are just building a device you are unlikely to succeed,” says Amazon CEO Jeff Bezos. “Today it is about the software, the software on the device and the software in the cloud. It is a seamless service."

Some would say that is a reason no Android tablet has yet taken off to rival the iPad: tablets are a window into the cloud.

The companies that get this are best positioned in the post-PC world. It is not just about the device, but about the services on the Internet tied to that device.

If You Are Just Building A Device You Are Unlikely To Succeed

Amazon to buy WebOS?

Amazon is rumored to be among the top contenders to buy WebOS from Hewlett-Packard. The obvious application would be the 10-inch tablet Amazon is expected to develop.

The Kindle Fire is powered by Android, but it’s been heavily customized by Amazon to the point where you can barely tell, some would argue. Other players in the device business have reasons to create an ecosystem of products unified around a single operating system, Apple being the classic example.

But there has been a rapid trend towards operating system fragmentation recently, with major smart phone suppliers deciding they must own both their operating system and hardware to compete at the top levels globally, in both smart phones and tablets.

Amazon might believe it needs a similar degree of uniqueness for its larger-screen devices that might function less as e-readers and more as full-fledged tablets.

Amazon to buy WebOS?

Is Amazon Kindle Fire Really a Tablet?

Amazon’s launch of a new seven-inch, color screen “Kindle Fire,” priced at $199,  got most of the attention, talked about by many as an “iPad” competitor, but Amazon actually also released three other new Kindle devices that aim to strengthen Amazon’s grip on the e-reader market.

One of the new Kindle e-readers does away with the touch screen and 3G features that the other new Kindle models employ, using Wi-Fi and a directional pad instead, and will cost just $79. That is an attempt to lock up the e-reader market at the low end. Amazon launches Kindle Fire

The other two Kindles that Amazon introduced are based on the black-and-white “E Ink” displays. The Kindle Touch 3G uses infrared senors for touch, and thus eliminates the tiny keypad below the screen. It includes free wireless 3G data service, which will work in over 100 countries, for just $149. The Kindle Touch model is identical but lacks the free 3G service, relying on Wi-Fi instead, for just $99.

Some will say the Kindle Fire is designed to compete more with the Barnes & Noble Nook than the Apple iPad, at least in the current form factors. Until a larger-screen Kindle is introduced, the Kindle will largely remain a content consumption device, where the Apple iPad can be used for some work tasks as well.

Of course, many of use would argue that the iPad, though it can be used for a bit of work, also mostly is a media consumption device.

What is clear enough is that, as expected, Kindle will be designed to be a razor to sell razor blades. The idea is to put a low-cost device widely into the hands of users and then create revenue by commerce and content sales.

The comparison to the Apple iPad will be irresistible, but some of us would argue the Kindle Fire and the other devices more directly represent an evolution of the e-reader device.

Originally designed to support reading books, the e-reader is becoming a portable multimedia platform, supporting consumption of magazine, video and audio content as well.  Kindle Fire not a direct iPad competitor

In that sense, Amazon might be on the verge of dominating one part of the media consumption device space that more closely resembles the iPod touch market segment than the iPad.

Though it remains to be seen how end user behavior could develop, retailers say tablets already have changed end user online shopping behavior. Tablets still account for only a small percentage of overall e-commerce, but account for a higher percentage of commerce activity.

While the conversion rate—orders divided by total visits—is three percent for shoppers using a traditional PC, it is four percent or five percent for shoppers using tablets, says Sucharita Mulpuru, an analyst at Forrester Research. Tablet Users Spend More Online - WSJ.com:

Many retailers also report that tablet users place bigger orders, in some cases adding 10 percent to 20 percent to their orders, than shoppers using PCs or smart phones. In a behavioral sense, a tablet seems to facilitate different behavior than a PC or a smart phone.

It remains to be seen how other behavioral differences might emerge as the tablet space and the media consumption device space begin to differentiate.

Kindle to Get eBook Lending, Periodicals

It looks like Amazon is going to be adding newspaper and magazine subscriptions for iPads and iPhones. The Kindle for Android app and other apps will get the same update too later down the line. Kindle to Get eBook Lending, Periodicals

Will the new Amazon tablet also get e-book lending?

Family of Amazon Android Devices?

Amazon is preparing an “entire family” of Android devices that will launch this holiday shopping season, according to Taylor Wemberly at Android and Me. A smartphone might be among the devices, expected to feature tablet devices of various form factors.

Amazon already has gotten into the Android applications market space and online video rentals, so the move is not far fetched. Amazon has been really good at providing excellent customer service and a well-designed recommendation engine, so you can imagine the possibilities, over time, as those skills are applied to the mobile location feature and the shopping experience.

And since Amazon lives and dies by the ease of "buying something," it might not be too hard to suggest that Amazon is thinking about ways to integrate payments into the mix as well.

Kindle Content Sales Top Book Sales

"After selling millions of third-generation Kindles with the new Pearl e-ink display during the quarter, Kindle books have now overtaken paperback books as the most popular format on Amazon.com," says Jeff Bezos, founder and CEO of Amazon.com.

"Last July we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of this year, so this milestone has come even sooner than we expected, and it's on top of continued growth in paperback sales."

None of that stops some analysts from worrying. A study by market-research firm iSuppli last year estimated the total cost of materials for the 3G Kindle at $155.56, about $33 less than the $189 selling price for the device.

Since iSuppli’s estimates do not include the cost of software, licensing, royalties, manufacturing expenses (Amazon outsources production of the Kindle) and a cut for the wireless carriers, and well are marketing expense, analysts suspect Amazon likely sells the Kindle at a slight loss.

Many analysts assume the Kindle operates on a razor-razorblade model, which is the tactic of selling one good (like razors) at a discount, and a second good that it dependent on it (like razorblades) at a higher price. For Amazon, this would mean selling the Kindle at a discount in order to make money on e-book sales.

Amazon therefore uses the reverse of the model employed by Apple. Apple sells content only so it can boost sales of its devices; Amazon sells hardware only to boost sales of content.

Amazon Media Room: News Release

Amazon Prepping Netflix-Like Streaming Service:

Amazon.com appears to be readying a service that would make 5,000 movies and TV shows available to watch instantly, at no incremental charge, for members of the online retailer's $79-per-year "Prime" free-shipping membership program.

The service would provide "unlimited, commercial-free, instant streaming" of 5,000 movies and TV shows' with content similar to what is available through Netflix's streaming component. Amazon's service, though, would be limited to standard-definition video.

The notable observation here is that Amazon will try to create a business model that does not rely directly on incremental revenue, but rather on increasing subscribers to another existing service Amazon deems important. That's similar to Apple selling music and video to sell iPods and iPads. Netflix, Comcast and others, on the other hand, have less wiggle room, since their video businesses are about selling video.

Comcast, of course, also is trying the Amazon tactic, tying a fixed-line cable subscription to its mobile and untethered online video service. Still, it always is dangerous when a new competitor proposes to give away what another company sells.

Amazon Prime is a membership program that provides free two-day shipping as well as one-day shipping for $3.99 per item on certain purchases.

Currently Amazon offers a selection of more than 75,000 movie and TV show rentals or purchases through PCs, Microsoft's Xbox 360 and connected-TV devices, including those from TiVo, Samsung, Sony, Panasonic, Vizio and Roku.

Amazon.com's agreement to buy full ownership of LoveFilm, a European DVD rental and movie-streaming service, confirms the e-commerce giant intends to beef up its digital-video offering.

Operating in the U.K., Scandinavia and more recently Germany, LoveFilm's service is very similar to that of Netflix in the U.S. But it is well behind the American company, both in subscribers—1.6 million versus 17 million—and in the amount of streaming content it has licensed.

read more here

Cloud Computing: When to Use it; When Not To

There's an old set of tradeoffs between buying services or "doing it yourself," where it comes to computing or communications infrastructure. Hosted VoIP virtually always makes more sense than buying systems for a smaller business. But premises-based solutions typically are more economical for large enterprises.

Something of the same argument can be when companies or people choose between cloud computing services and building their own data centers. Obviously, large enterprises often justify building their own data centers. Others might be able to justify renting space in somebody else's data center. Smaller organizations might well find that renting computing cycles is the better choice.

Google Sr. Manager, Production Network Engineering and Architecture at Google argues that the decision is highly dependent on duty cycle. Steady, predictable loads, especially at a high rate of utilization, will tip economics in favor of self-operated or co-located facilities. Highly-variable demand, and low volume, will tend to tip the economics in favor of a cloud computing solution.

"Think of it as taking a taxi vs. buying a car to make a trip between San Francisco and Palo Alto," says Gill. "If you only make the trip once a quarter, it is cheaper to take a taxi." But "if you make the trip every day, then you are better off buying a car."

"The difference is the duty cycle. If you are running infrastructure with a duty cycle of 100 percent, it may make sense to run in-house," says Gill. The detailed assumptions and analysis are here: https://spreadsheets.google.com/ccc?key=0AgWfa8v6EGzjdElXQVFzU1plSXdEQmVHZ3M5YjlsNVE&hl=en&authkey=CM_RzL0E#gid=0

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Did The iPad Preemptively Kill The US Tablet Market Like The Kindle & Nook Killed Other Ebook Readers?

The U.S. market for ebook readers is basically a choice between the Kindle or the Nook.

Can you can blame the Apple iPad for that state of affairs? Or is it the business arrangements? Ebook readers, after all, are only as valuable as the selection of available content, pricing and delivery of that content.

It might be more difficult than most of us realize to get all those elements, plus an attractive user interface and device pricing, into alignment.

Did The iPad Preemptively Kill The US Tablet Market Like The Kindle & Nook Killed Other Ebook Readers?

iPad Halo Effect on Netflix

Despite immediate reactions about sales volume for the new Apple iPad, it is way too soon to make an assessment of the device's importance. But it is not too soon to note that the iPad already is having some direct impact on other firms in the ecosystem. 

Shares of Netflix, for example, hit a 52-week high early this week to $80 a share after its app for Apple Inc.'s iPad became available. 

Netflix members can watch an unlimited number of TV episodes and movies on the new iPad at no additional cost. Subscriptions begin at $8.99 per month.

And though the iPad has been widely seen as a competitor to the Amazon Kindle, Kindle inventory is immediately available on the iPad, which should help sales of content, even if eventually reshaping demand for the Kindle hardware reader. 

Why Buy a Kindle if You Can Use an iPad?

An app to read e-books from Amazon’s Kindle store on the iPad has arrived in iTunes. If that is the case, why buy a Kindle at all? Price, you might correctly note, but wait a couple of years and that problem goes away.

That suggests a major Kindle price cut has to be coming. Historically, many multi-purpose computing devices have sold better than single-purpose devices, when there is a choice. That's why iPhone sales are cannibalizing iPod sales.

With the arrival of the Kindle app, iPad owners will be able to choose whether to read books from Amazon or from Apple. Using the iPad gives users access to all Kindle inventory, with Apple inventory thrown in, as well as color support and the ability to do lots of other things that require Internet access, ranging from email to Web browsing to messaging.

New Taxes on Amazon in Colorado; Amazon Stops Supporting Colo. Sales Associates

Economists are uniformly agreed on one essential fact of economic life: when you raise the price of some product, you get lower sales. That suggests lower sales for Amazon in Colorado, since the state has now imposed new taxes on Amazon sales associates in the state.

One can argue about the utility and fairness of sales taxes on Internet commerce. But it is hard to argue that sales will be under greater pressure now that the prices for virtually all Amazon products now are going to cost buyers more.

Amazon says the problem is that the Colorado law increases regulatory compliance burdens in an attempt to induce Amazon to collect sales taxes, something it says it will not do.

For that reason, Amazon will stop paying commissions to Colorado-based associates for providing leads that turn into sales, and will shift such payments to partners in other states, or will sell directly from the Amazon site.

"As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly," Amazon says.

"The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates," Amazon says.

Associates in Colorado have had their accounts closed as of March 8, 2010.


North Carolina and Hawaii also have levied similar taxes on sales of Amazon products made from affiliated in-state Web sites. The taxes apparently do not cover sales made directly from Amazon's own site.

"The sad irony of this issue is that the 'Amazon Tax,' as the North Carolina General Assembly calls it, will not collect any taxes; it will only cause lost revenue for North Carolina businesses," says Bob Butler, BestThinking.com CEO, a former Amazon affiliate based in Cary, N.C.


New Taxes on Amazon in Colorado