Click to Skip Ad
Closing in...
  1. Amazon Deals
    07:58 Deals

    10 deals you don’t want to miss on Saturday: $5 Alexa smart plugs, $110 electric sta…

  2. Amazon Deals
    07:59 Deals

    10 deals you don’t want to miss on Sunday: Rare Nest Thermostat sale, Alexa in your…

  3. Self-Emptying Robot Vacuum
    16:11 Deals

    Amazon coupon slashes our favorite self-emptying robot vacuum to its lowest price ever

  4. Amazon Gift Card Promotion
    14:41 Deals

    Amazon’s giving away $15 credits, but this is your last chance to get one

  5. Buy Fire TV Stick 4K Sale
    18:11 Deals

    20% off when you buy a Fire TV Stick 4K in Amazon’s surprise sale




This is why Amazon will soar in the smartphone market

December 17th, 2013 at 7:45 AM
Kindle Fire Pricing Strategy

According to a brand new study from Consumer Intelligence Research Partners, those Amazon customers who own a Kindle spend $1,223 on Amazon products annually. Amazon customers without the tablet spend “just” $790 annually. This $443 gap means that Amazon’s strategy of selling Kindle Fire tablets at near zero margins is working like a charm. Keeping the Kindle device pricing low is creating an army of consumers who are spending freely on Amazon products. In the light of these numbers, it could make perfect sense for Amazon to not only sell its tablets at zero margins, but maybe even below cost.

These figures mean that it is now practically certain that Amazon will push into smartphone market. The Kindle impact on tablet users is too delicious not to extend to the mobile phone market. An effective smartphone push would help Amazon lock its key customers into a permanent state of Amazonhood — a mental state where any purchasing impulse can be immediately satisfied with a few clicks, no matter where you are.

The CIRP survey found out that consumers who own a Kindle device visit Amazon.com site more often than non-owners — AND they shop across more product categories than non-owners. The tablet seems to have an impact shaping consumer behavior beyond jacking up the annual dollar spend, increasing curiosity about a wider spectrum of products.

Replicating this with a smartphone is a carrot that is likely to tempt Amazon to go for an aggressive handset pricing route. A high-end smartphone for free with an 18-month contract or something in that region; or perhaps an unusually good deal on mobile data pricing. Once Amazon makes its phone move, it is likely to wipe out whatever dreams Motorola and HTC had of ever returning to relevance in the U.S. market.




Popular News