Amazon Adds In-App Sale of Physical Goods

Discussion
Aug 30, 2013

Amazon is giving app developers digital tools to sell the site’s physical goods from within mobile applications, opening a new selling channel.

Developers, according to blog entry from Mike George, vice president of Amazon Appstore, Games and Cloud Drive, have so far had three methods to monetize their apps: selling them outright, offering free apps with paid upgrades for better functionality, and using mobile ads.

With the launch of Mobile Associates API, currently available for Android, app developers can sell "real products from the millions of items at Amazon," whether physical (e.g., toys, clothing) or digital (e.g., eBooks), from inside their apps or games. Developers earn a commission of between four and six percent on the products they sell through their apps.

[Image: Amazon Mobile]

The blog entry listed a few examples of what developers might be able to do:

  • Sell a single item from Amazon in your app or game: The boss at the end of a stage in your game is a giant three-headed wolf. Sell the popular "Three Wolf Moon" t-shirt from Amazon.
  • Showcase a category of goods from Amazon in your app or game: Your app is based on improving nutrition over time. Offer health-related products like vitamins, supplements, etc. or the Kindle edition of The 4-Hour Body by Tim Ferriss from within your app.
  • Bundle a purchase of a physical product from Amazon with digital content within your app: Sell a toy version of one of the characters in your game, then automatically enable them to play as that same character.

A customer initiates a purchase from within the app and then is presented with a dialog box showing the product details and cost. Amazon’s 1-Click then completes the purchase and the item is shipped.

"It is easy to imagine how the new in-app purchasing could appeal for marketers: Stick a virtual pair of the latest Air Jordan shoes on a game character and offer them at a discount," wrote Greg Bensinger in the Wall Street Journal’s Digits blog.

While many tech bloggers saw this as an avenue for developers to make money, one concern not unsuprisingly was the arrival of constant product plugs.

"For consumers, the world of online advertising crawls and pop-ups could soon be replaced by promotional sales links," wrote Internet Retailer in its review. "Eventually it’s possible that that every product mentioned in an app could be available to buy."

Will mobile users be receptive to the sale of physical products through apps? Does Amazon gain much first-move advantage through Mobile Associates API?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

10 Comments on "Amazon Adds In-App Sale of Physical Goods"


Sort by:   newest | oldest | most voted
Herb Sorensen, Ph.D.
Guest
8 years 8 months ago
This is one aspect of the continuing Convergence of Online, Mobile and Bricks (COMB) retailing. But it also points up how advertising can return to true selling, not just the arm-waving of the past 100 years. This is a crucial development, little understood, because 100 years ago, with the advent of self-service retailing (shopper, sell YOURSELF,) a lot of the true selling vanished into mass advertising, that is literally incapable of closing sales, the single most crucial point of the sale itself. This led to widespread dilution of the meaning of the word, tearing out the guts of the sales process—the close—and imputing salesmanship to a trillion dollar industry. Advertising is severely truncated selling—no close. This is the context to see this new development, because it lets the app actually CLOSE the sale, within the app. That is, the app is naturally relevant to advertising something, since the game is online, why not let the app complete the sale? THAT is the all important CLOSE, missing from 99+% of advertising, which is actually an adjunct… Read more »
Lee Kent
Guest
8 years 8 months ago

Welcome to affiliate selling! This type of selling has been around for quite a while. Usually the vendor has to approve the seller in order to make sure their products will be associated with the right kind of brand, etc. I’m not sure how Amazon is going to handle that end if they are simply allowing the use of the API to anyone.

Aside from that, how can it hurt to have others marketing and selling your products? Sales you would otherwise not have for a small percent. No brainer.

There will be those who will overdo and the consumer will just stop using the app. And then there will be some fun and creative new apps with new twists. I like it!

Al McClain
Guest
Al McClain
8 years 8 months ago

I don’t know whether this will move a lot of product, and I suspect that it won’t, at least initially. But, the impressive thing about Amazon is they never seem to rest. They are consistently out innovating their retail competition and constantly trying new things. Amazing.

Mark Price
Guest
Mark Price
8 years 8 months ago

Once again, Amazon has taken the step to break down the barriers between consumers, their interactions and e-commerce. Building APIs that can be incorporated into apps provides an additional integration of Amazon into the lives of consumers.

Amazon has a tremendous amount to gain from first mover advantage—it is unlikely that app developers will integrate more than one API into their products.

While consumers may not wish to make complicated purchases while inside an iPhone app, the purchase of a single affiliated item or a range of related items should be a no-brainer.

Karen S. Herman
Guest
8 years 8 months ago

Stats show that mobile devices are becoming more popular with gamers than PCs and I think this new sales channel could really appeal to app developers, and especially to game app developers. Of the three ways of selling, I most like the idea of bundling a physical product from Amazon with digital content within the app. This leads to lots of branding extensions and could create new lines of game specific products for Amazon to sell as well.

Janet Dorenkott
Guest
Janet Dorenkott
8 years 8 months ago

I got half way through this article, jumped onto E-Trade and bought more stock in Amazon. In essence they are giving themselves a percentage of every developer’s new apps with this concept. They are targeting the Droid marketplace and Apple’s iStores with this concept. Now I’ll just sit back and watch my stock go up.

Brian Numainville
Guest
8 years 8 months ago

This is a significant development. Not only is it yet another avenue for selling products, it will reach new customers in a targeted fashion, specific to the app they are engaged in at the time. While it may take a while to build volume, credit due to Amazon for trying yet another new avenue!

Karen S. Herman
Guest
8 years 8 months ago

I reached out to an app developer that I work with and here is his reply: “That sounds pretty interesting. I buy almost everything from Amazon since they sell pretty much everything. So I could well imagine recommending users buy certain things directly from within an app from Amazon.”

Dan Frechtling
Guest
8 years 8 months ago

App monetization is early and unproven. The typical app developer makes between $1000 and $4000 per app, according to Forbes.

In-app banners are annoying and irrelevant, even when geo-targeted. In this context, Amazon Mobile Associates API appeals to game and non-game app developers.

The most popular game titles can make a market in game features and virtual goods. But with the average independent developer typically earning $.99 from a user who buys the game, the prospect of $.50 (5%) for a $10 purchase initiated by the user makes Amazon’s program appealing.

But while games form the largest category of top apps, they are well into the minority beyond the top 100. Product recommendation apps are a natural extension. But other categories such as entertainment, lifestyle, travel loom large and would need to participate for Amazon’s program to scale.

Familiarity with Amazon and its developers program will encourage a lot of trial from app developers, for whom the bounty today is only about enough to fund a family vacation.

Fernando Roa
Guest
Fernando Roa
8 years 8 months ago

Nothing ventured, nothing gained. Amazon is venturing first into this arena. If it works, Amazon will gain financially and also gain in terms of reputation. If it fails, it is racked up as experience for Amazon management. No deep analysis needed here, really. It is just a distribution play. Could win, could lose.

wpDiscuz

Take Our Instant Poll

How would you rate the size of the opportunity to sell physical products through apps?

View Results

Loading ... Loading ...