With the launch of Amazon Fire smartphone, the question everyone is asking is “Will consumers buy Amazon Fire?” But the real question should be “How will Amazon get their phones in the hands of consumers?”
Even when consumers’ interest is piqued by the promise of innovative features, especially things like Firefly (the Fire Phone’s big impulse-buying weapon), the smartphone industry can be difficult to quickly penetrate due to various barriers of entry.
Right now, mobile shopping is a two-horse race between Apple (with 63 percent of the mobile commerce market) and Android (36 percent). Former market leaders Blackberry and Nokia account for less than 1 percent of mobile commerce traffic. Microsoft who launched their phone to similar fanfare amid much speculation, failed to make a dent in the market share. Many have tried and failed to make an imprint in the smartphone market, but Amazon brings a slightly different approach.
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Reference: Skava’s Mobile Shopping Trends 2014 Q1 Report, which monitors hundreds of millions of mobile commerce transactions.
Amazon will look to target its 244 million loyal US and UK customers to grab market share from Apple and Samsung through strategic partnerships with carriers and incentives, such as including free Amazon Prime Video for active shoppers. By leveraging the enthusiastic customer base it has built through providing convenient, user-friendly services like Amazon Locker and Prime Music, Amazon has the potential to do what Windows couldn’t — become another major player in the industry.
Smartphones and apps go hand-in-hand, and even though Amazon is using a custom version of Android, Google is not making it easy for the commerce giant. Amazon will face an uphill battle making sure that the apps on the Fire Phone reach a level that meets consumer expectations set by Apple and Google.
However, a less compelling App Store could be offset by the Fire’s Firefly feature, which enables consumers to scan hundreds of millions of items with the phone’s camera and buy it instantly from Amazon.
Firefly poses a major threat to retailers, of course, because it amplifies the already massively successful showrooming effect — where brick-and-mortar retailers pay expensive retail space and staff while Amazon reaps the sale — by recognizing an array of products and linking the customer seamlessly to purchase via Amazon prime. Online retailers will watch also as it makes it easier for users to buy direct from Amazon, and not directly from retailers.
However, wherever there is a potential crisis, there is also an opportunity.
If the Fire Phone gains traction, it could be a major boost for mobile shopping on all mobile devices, as the ‘one-click purchase’ feature could force the smartphone giants to make mobile shopping more integral to their OS experience. It will provide valuable data to prove that consumers want convenient and streamlined mobile shopping experiences, which will ultimately be a boost for online and mobile retailers everywhere.
Although the Fire and Firefly may be a threat in the short term, we’re excited to see manufacturers hopefully fall in line with Amazon’s approach to make shopping central to the mobile experience, as well as seek out ways to make that experience the best it can be for customers.
The major surprise for me was the Fire Phone’s price of $199. Although it falls in line with other major smartphone prices, Amazon’s approach seems to be on enabling users to buy even more from Amazon, and as such I would have expected a much cheaper price. For a company that has always sacrificed profits for market share, Amazon is not solely focusing on the potential of increasing Amazon.com sales through Amazon Fire, but is looking to become its own name in the smartphone world.
In the end, both online and brick-and-mortar retailers will look to strengthen their relationship with loyal customers. The experience, be it in a store or online, is still of paramount important to shoppers, and retailers that have adapted to previous threats well are likely to stay ahead of their competition.
Arish Ali is the CEO and co-founder of Skava,one of the leading providers of mobile and multi-touch point and mcommerce solutions to many of top tier retailers in the US.