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Amazon significantly boosts commerce potential for mobile apps

August 28, 2013

Amazon expands affiliate program to mobile apps

Amazon is giving mobile commerce in applications a big boost by making it easy for marketers and developers to sell hard goods directly from within their mobile apps and games.

App users will be able to shop for millions of physical Amazon products from within Kindle Fire apps as well as apps for other Android devices using the ecommerce giant’s one-click purchase experience and Amazon Prime shipping. The new Mobile Associates API provides developers with a new way to monetize their apps and games in addition to digital in-app purchases, subscriptions and mobile ads.

“This seems significant in terms of Amazon being able to uniquely take advantage of their huge distribution network as another mobile revenue stream for themselves and app developers,” said Rob Hoxie, vice president of business development and partnerships at Atimi Software, Vancouver, Canada.

“This is a very interesting opportunity for consumer-packaged goods vendors and brands, as well as a potentially easier route to sales for sports and entertainment merchandise, i.e., within team or movie apps,” he said.

“There may be tax implications they need to look into in terms of creating Nexus in U.S. states where they don’t currently have to report sales taxes. While Amazon is responsible for the ultimate receipt of the goods, the app developer can, of course, get caught in the customer service loop.”

Broader reach
Amazon is already a significant player in mobile commerce, and this latest strategy will only enhance that while leveraging its existing distribution network to drive in-app purchases.

For developers, the move opens up new opportunities for how they monetize their apps beyond advertising. While not many apps currently include mobile commerce functionality, this could change as a result of Amazon’s move.

“[Amazon is] a mobile commerce powerhouse that generates approximately $5 billion in annual mobile commerce sales,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston. “By opening up their affiliate program to app developers, they can tap a network of ‘sales associates’ and provide these developers with a path to app monetization.

“For Amazon this makes a lot of sense, as it instantly broadens their reach and taps a massive new audience of potential customers they do not have to acquire,” he said.

Springpad is enabling users to purchase goods from Amazon within its app

While mobile commerce in apps is growing, not everyone is finding success with an in-app shopping strategy.

So, it remains to be seen how users will embrace being able to purchase Amazon goods from within a seemingly unrelated app.

“I wouldn’t say it is as significant as when Amazon released their price-checker app, but it is a fascinating evolution of their mobile strategy,” said Nikki Baird, Denver-based managing partner at RSR Research.

“At a time when some retailers are thinking that they don’t need commerce even in their own branded mobile app, here’s Amazon making it possible for their commerce to be embedded in anyone’s app,” she said.

Revenue sharing
Developers are expected to use the new API to offer contextually-relevant goods from, giving them a chance to create a deeper connection with users.

When using the new API, developers earn up to six percent on qualifying in-app customer purchases.

For example, a developer of a nutrition and fitness app could sell vitamins, supplements and fitness gear within its app.

Amazon is giving developers three ways to sell merchandise within their apps: selling a single item from within an app or game, showcasing a category of goods or bundling the purchase of physical goods with the purchase of digital goods. An example of the last strategy could be giving users a way to receive the physical version of a board game when they purchase the virtual one.

Some of the developers already integrating these experiences into their apps and games include Animoca, Fismos, Days of Wonder and Spring2Partners.

Animoca has built an in-app custom offer wall in the Thor: Lord of Storms game featuring relevant items such as Thor’s hammer and action figures.

The developer also envisions giving away free virtual items such as in-game currency whenever players purchase physical products from the offer wall as a way to increase engagement.

Merchandising strategy
Personal assistant app Springpad gives users a way to easily save recommendations for products, books and movies as well as plan bigger projects such as home improvement and travel. With the new Amazon Mobile Associates API integrated into the app, users can now also purchase the products they save.

One of the challenges app developers will face with selling hard goods from Amazon is when and how to present the purchasing opportunities to users.

“The challenges that will occur is what is the right way to market within an app to make a hard goods purchase,” said  Arun Ramdeane, senior account executive at Atimi Software. “When and where does it make sense.

“You do not want the consumer to feel that this is the only goal of the app vs. it is a feature to complement the app,” he said.

“I think developers can’t just look at this as a way to gain six percent on referrals. There needs to be good thought on how to integrate this into their apps and where and when it makes sense.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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