Less than a month into the New Year and the e-retailer and marketplace announces plans for three additional U.S. fulfillment centers.
Amazon.com says it hit $1 billion in sales in 12 months through its mobile channel.
Jeff Bezos, founder and CEO of Amazon.com Inc., was a master of understatement in a statement he issued yesterday on the company’s 2010 second quarter financial results.
“We’re encouraged by what we see in mobile,” he said.
In the last twelve months, customers worldwide purchased more than $1 billion of products from Amazon using its m-commerce site, mobile app, text message selling program or Kindle e-reader. The number also includes sales of the Kindle hardware itself, not necessarily purchased through a mobile device.
Like the iPad, it’s debatable whether an e-reader is truly a mobile device, as it is not mobile, i.e. ultra-portable, like a smartphone or conventional phone, and does not render an optimized version of an e-commerce site. And sales of hardware like the Kindle not conducted through a mobile device are not m-commerce. But even taking Kindle and e-book sales out of the picture, Amazon has sold hundreds of millions of dollars in the mobile channel.
One way or another, the news should open the eyes of many retailers that have been sitting on the sidelines waiting to see how mobile commerce pans out. As eBay showed last year with $600 million in mobile sales, Amazon has proven this year that there are a number of consumers totally comfortable with purchasing goods on their mobile phones, and that m-commerce is weaving itself inextricably into the fabric of e-commerce.
“Amazon’s mobile sales milestone is one of the clearest signs that consumers are willing to purchase goods via their mobile devices,” says Tom Nawara, vice president of digital strategy and design at Acquity Group LLC, a digital marketing firm that specializes in e-commerce and m-commerce strategy and technology. “Like Amazon’s 2001 milestone hitting $1 billion in e-commerce sales and their continued growth from there, the significant mark of $1 billion in mobile sales is only one step, a major step, in the overall mobile commerce marketplace. This should be a clear sign for other retailers that mobile commerce is not just a fad; it is a legitimate revenue channel that can only grow from here.”
Hitting $1 billion in mobile sales is solid proof that consumers want to engage their favorite retailers through their phones, says Dave Sikora, CEO of Digby, an m-commerce technology provider. “The mobile channel will accelerate in importance during the next several years as smartphones displace traditional computers as consumers’ favorite device,” he says. “Amazon’s results should serve as a rallying cry for all retailers to begin developing new ways to engage their customers through mobile devices.”
Julie A. Ask, a vice president and principal analyst at Forrester Research Inc. who specializes in m-commerce, has conducted in-depth research into who Amazon.com customers are and how they shop. She says they are very sophisticated users of mobile phones, and that Amazon is playing to this strength.
“Amazon makes things convenient—their mobile app and mobile web site are well done,” she says. “And they have an easy payment mechanism. Most of us have Amazon accounts, a user name and password, so there’s no need to enter credit card information.”
Multichannel retailers should be impressed as well, and should pay special attention to how this web-only retailer is performing in the mobile channel, experts say.
“I have to think that a large portion of this revenue came while consumers were standing in some bricks-and-mortar retailer’s store. So I see this as a nearly $1 billion missed opportunity for store-based retailers to capitalize on mobile,” says Nikki Baird, a managing partner at Retail Systems Research LLC who follows mobile commerce. “The point is: Provide a more compelling mobile experience, and be transparent in your prices and availability, so that consumers are never even tempted to comparison shop while at the shelf.”
In the end, Amazon.com is leading in mobile commerce, in part, because it is the leader in e-commerce. It’s a brand a great many people turn to first.
“People start their mobile browsing experience with what they know online, and for shopping, that is Amazon,” says Mark Grondin, senior vice president of marketing at e-commerce and m-commerce technology provider Shopatron Inc. “Because of this, Amazon is a bellwether of the rise of m-commerce. The interesting next development will be whether someone else can provide a more compelling mobile shopping experience, thus taking ownership of the direction away from Amazon.”