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Amazon Expands In-App Purchases of Real Goods

Aug 27, 2013

Amazon Expands In-App Purchases of Real Goods

By Greg Bensinger

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Amazon wants its retail store to always be just a click away.

The Seattle retail giant announced Tuesday that developers can allow physical goods from Amazon.com to be purchased through just about any Android app. That means users could buy an actual calendar to hang on their wall while using a calendar app, or spices from a recipe app. 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.The announcement is one more sign of how Amazon aims to replace both the corner and department stores by offering nearly all consumer goods with just a click. The company has in recent weeks begun selling fine art and wine, as well as fresh produce in new markets.

Eric Hautemont, chief executive of game maker Days of Wonder, said the new program was a no-brainer. “How else can we close the loop between digital and physical?” said Hautemont. “Our customers want to be able to make these purchases easily.”

Days of Wonder, based in Los Altos, Calif., will offer a new version of its game “Ticket to Ride” in a digital and physical version starting Tuesday, Hautemont said. The physical board game will be sent to customers through Amazon’s own warehouses.

Depending on how much merchandise they move each month, developers get between a 4% and 6% commission on the products they sell through an app, in addition to any commission they get through the Amazon site, said a spokeswoman.

The announcement comes just days after Facebook backed off an initiative to sell physical goods like teddy bears and cupcakes through its social media site, due to slow sales. That program had been viewed as a potential threat to Amazon.

Amazon decided to roll out the in-app purchasing of physical goods after a successful test with Activision’s “Skylanders Cloud Patrol” game last year. Users could buy plastic toy versions of Skylanders characters directly through the app for delivery to their home and were also given digital versions to play in the game.

The Amazon spokeswoman declined to discuss specifics of the Skylanders promotion and Activision representatives didn’t respond to a request for comment.

Amazon Adds Ability to Buy Goods From Within Mobile Apps

Amazon.com Inc. (AMZN) said it’s introducing a feature that will let people shop for goods from within mobile applications.

Software developers will be able to create games, sports, weather and other apps that sell products from Amazon, either inside the app or by linking to Amazon’s Web store, the Seattle-based company said in a statement today.

While consumers could buy digital goods such as game features and magazines via in-app purchasing, Amazon has only previously tested the sale of physical products through the same channel. The new initiative gives Amazon Chief Executive Officer Jeff Bezos more opportunities to sell merchandise while letting software developers earn a commission of up to 6 percent from the online retailer for any sales they generate.

“Imagine a developer of a nutrition and fitness app can now offer their customers the ability to purchase vitamins, supplements and fitness gear within the app, directly from Amazon,” Mike George, Amazon’s vice president in charge of games, app store and cloud drive, said in the statement.

Days of Wonder Inc., a games company, said it’s introducing a new version of its “Ticket to Ride” mobile app that will also let users buy the board game via Amazon. In some cases, users will be able to buy both the physical and digital versions of a game as a single package.

Amazon gave developers the ability to add in-app purchasing for digital content in April 2012, matching a feature already offered by Apple Inc. (AAPL) and Google Inc. (GOOG) Walt Disney Co., Conde Nast Inc., Gameloft SE (GFT) and Dow Jones & Co. were some of the first participants in Amazon’s program.

Physical, Digital

Eric Hautemont, CEO of Los Altos, California-based Days of Wonder, said the physical and digital versions of games are complementary. When the company released the iPad version of “Ticket to Ride,” sales of the board game jumped 30 percent. When the iPhone version came out, they jumped another 30 percent, he said.

“Our expectation is going to be a significantly greater conversion rate from people that have never played Ticket to Ride and discover the Kindle version, and end up buying the physical board game as a result,” Hautemont said.

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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