Amazon has a lot of information about your buying habits. It knows your interests, the books and items you store on your wish lists so that it captures intent. If it can lock a larger percentage of your leisure time, its billion dollar business will multiply several times over.
The reviews of the new tablet from Amazon, the Kindle Fire are in – and one of the features that every reviewer has played up is that it makes shopping on Amazon much easier. With the Kindle Fire, Amazon puts its shopping cart in your hands – and actually makes you pay for it! You can buy any item from the store as long as you have wifi. That’s why Amazon has not bothered to put in a camera or provide 3G access. At less than $200, it is just 40% of the iPad’s cost.
The benefits from Amazon Prime – the $79 per year for free shipping has been extended to provide an e-book that you can ‘borrow’ and return. For ebooks, there is no distribution or storage cost. They reside on Amazon’s mighty cloud and you pay real money for the copies of the bits. You can only borrow one book a time and it means that you pay about $7 a month for the privilege. Then you get movies streamed for free. Plus, you subscribe to magazines, place orders for books or browse the catalogue of products.
Apple led the way to define the online store experience where the tablet became the vehicle for consuming content and paying for apps or games. It’s just packaged so skilfully, that you don’t even realise that you are paying for the privilege. Apple stores – online and retail earned $108 billion last year and the online store contributed massively to that total. What Apple has perfected is the insights into buying behaviour in small doses of less than a dollar. Dollar stores in virtual form that can be accessed on just about any device connected to the internet.
Very early on, Apple realised that a ‘frictionless’ buying experience made hordes of people part with their money for everything from music tracks to apps – and the key was the 99 cent pricing. Apple or Amazon do not have to invest in the production of this content. They simply act as gatekeepers and pocket a tidy amount every time a customer makes a purchase. While Apple has real world stores, Amazon does not. But they can put up a huge amount of merchandise online and not spend much on logistics and distribution. So, they can sell at an extremely attractive price and lock you into the store as well. Tracks bought on the Apple Istore do not play on any other MP3 players. ebooks in Amazon’s Kindle format cannot be opened in other ebook readers, for example. There is still no accepted e-book standard because the agreements between publishers, stores and authors have not been sealed as yet.
So, if you think you’re getting the latest and the greatest tablets, consider this – they’re fabulously designed shopping carts and the biggest companies in the universe have a direct route to your wallet, one dollar at a time!