Launching a $649 smartphone in an already saturated market may seem a naïve move to many but not to Amazon.com, Inc. (NASDAQ:AMZN). The debates and speculations are still high whether the Fire Phone will be successful or will it back-fire? But ComScore looks at Amazon’s move as a pretty smart one considering the growth of m-commerce industry. The online retail giant is optimistic on leveraging on its wide reach to increase its retail business through the smartphone.
The smartphone industry is booming though, shopping on mobile devices is yet to gain much traction. Amazon, with its pre-installed apps, plans to challenge that. The retail benefits offered to Fire Phone users are endless including the Amazon’s Shop app, Kindle Books, Amazon Music, Audiobooks and Amazon app store. In addition to the pre-installed apps that facilitate shopping on mobile devices, Amazon also offers free-12 month Amazon Prime services to Fire Phone users. Amazon Prime is the free shipping of all goods and access to music and videos in exchange of yearly membership of $99. These offers are enough to entice the customers to think of the deal as the win-win, but this may help Amazon to acquire few heavy-duty shoppers in long run.
M-Commerce Industry In U.S. Accounts for Less Than 12% of E-Commerce Industry!
The m-commerce sales in 2018 is expected to reach $626 billion – equaling the e-commerce sales in 2013. However, the m-commerce sales currently hover around 10% of total online spending. But the global market scenario will have least impact on Amazon Fire Phone sales as US being the prime focused market for Amazon – at least for next few quarters – where the company enjoys the strong leadership position. Mobile commerce market in the US hit $25 billion in 2013 and majority of Fire Phone sales will come from the same market this year. Mobile users spend 52% of their mobile time on exploring retail category during Q1 2014, in contrast, the dollars spent on buying from mobile is quite less. In the online shopping era, Amazon and eBay Inc. (NASDAQ:EBAY) are the clear market hoggers in the US. Amazon reaches out to 250 million users worldwide with majority of mobile shoppers. These figures clearly present a scenario where Amazon would be benefited from acceleration of m-commerce.
Firefly and Forked Android: Make or Break Scenarios?
Amazon Fire Phone comes packed with a feature designed to take on the real showrooms. The important interesting feature, Firefly, has the ability to scan items in the real world and direct the user to those items in the Amazon Store. Combined with the yearlong free services of Amazon Prime, this might be a devastating scenario for the real outlets.
Based on the forked Android, Fire OS 3.5, has very few apps in its kitty. Lack of apps in a smartphone or the app store does not seem a doable option for the consumers who consider their mobile phones as one-stop-solution for all things. Furthermore, compelling the users to switch from an existing smartphone to a complete new brand is a tedious process, specially when the smartphone boats a complete UI. Moreover, switching between phones and discarding all the paid apps seems a far-fetched move.
Although the mobile shopping is touted to become a big industry, the market share tells a different story. Apparently, launching a Fire Phone with a high-price tag for retail purpose may be an unwise move. With the declining average selling price of mobile devices, users are making an informed choice about putting their money. The availability of price-compare apps puts the consumer at an added advantage as they can judge against the prices offered at all websites and take the best deal. Moreover, with the free shipping option available on major online retail stores, the 12-month free Amazon Prime services may not lure the customers. In spite of all the guesswork going on in the tech industry, the fact remains that Amazon’s strategies have always worked out in its favour, be it retail marketing, e-books, instant streaming, pay services etc. If the features and cost click with the consumers, we might see another OEM vying for consumer’s attention and smartphone market share.