E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Amazon revealed its long-rumored Fire smartphone today. While the hardware specs are impressive, the most-important detail for online retailers, analysts say, is a feature that allows users to scan real-world objects and shop.
Amazon.com Inc. unveiled today its first smartphone, the Fire phone. And a key feature serves as a direct link from the physical world to the Amazon.com store.
Called Firefly, the feature allows users to scan real-world objects, from soap to phone numbers on posters to audio from a TV show. The phone recognizes about 100 million objects using a visual database. In the case of a bar of soap, the phone will pull up the Amazon.com listing. Scan a written phone number and the phone will dial it. Capture the audio of a TV show and the phone will pull up the specific episode of the show as well as other shows from that season—with the option to buy that content from Amazon, of course.
The link to Amazon.com is something analysts predicted. The smartphone is another way for Amazon to increase its digital footprint and stay in consumers’ minds, says Julie Ask, vice president and principal analyst at Forrester Research. “More and more companies own more of these mobile moments,” she says. “They either manufacture them or borrow them.”
The physical phone—and the Firefly feature—is one way for Amazon to create more moments with consumers. “Firefly will increase what we call impulse sales moments, buying something before I forget about it, with mobile,” she says. “Firefly will eliminate friction as part of that process.”
And it’s the link back to the store that makes the Fire phone stand out, says Tuong Huy Nguyen, a principal research analyst at Gartner. “Using the technology is not that interesting,” he says, adding that image recognition is not new. “But doing it and pulling together something that most of us have use for—shopping on Amazon, or just shopping in general—is.”
Amazon will open up Firefly to third-party developers, and several applications are already available. One such application scans wine bottle labels and pulls up information about that wine. This opens the object-recognition technology up to other retailers, says Nguyen. They could, in theory at least, develop an app that links back to their own stores, if Amazon permits that.
Amazon did not immediately respond to a request seeking more details about third-party developers using Firefly.
Not all observers were wowed by Firefly. Forrester vice president and principal analyst Sucharita Mulpuru doesn’t think the Firefly feature will improve the mobile shopping experience appreciably. “Amazon is already pretty frictionless even on mobile devices, and I’m not sure that trying to improve on that problem really creates something compelling,” she says.
The phone also ties into Amazon Prime, Amazon’s loyalty program that offers free two-day shipping and other benefits, including access to streaming music, TV shows and movies.
The physical phone has Gorilla Glass—a scratch- and impact-resistant glass—a 4.7-inch LCD HD display, a 13-megapixel front-facing camera, a physical button to launch the camera, unlimited photo storage on Amazon Cloud and the same Dolby dual stereo speakers as the Amazon Kindle. The phone also features the Mayday button that’s been popular with Kindle users.
The phone also features 3-D maps and the ability to control the display by tilting it. To demonstrate, Amazon’s CEO Jeff Bezos pulled up the dresses category on the Amazon store. He scrolled through the images by tilting the phone.
Amazon calls the 3-D effect dynamic perspective, and it’s accomplished by the phone recognizing where the user’s head is at all times. That’s done partly with four additional cameras in each corner of the phone that track the user’s head and eyes. Those cameras also include infrared lights so they can work in near-dark conditions.
The phone will ship on July 25, and, as rumored, will be available exclusively on the AT&T wireless network. For a limited time, the phone will come with 12 months of free Amazon Prime, for new and existing Prime members.
Getting market share will be tough, says Ask. “The likelihood that Amazon takes a chunk of the market is highly improbably at this point,” she says. Ask says reaching 1 million units sold would represent a milestone for Amazon, but even then Amazon would command just 1% of the smartphone market.
Colin Sebastian, the managing director of internet equity research at Robert W. Baird & Co. thinks the phone has special appeal for loyal Amazon shoppers but doesn't think that's enough to wrestle market share away from Apple or Samsung.
Amazon’s Kindle has slowly been gaining market share, especially in online shopping. Amazon Kindle Fire tablets accounted for 4.5% of e-commerce orders made on tablet devices in the first quarter of 2014, according to yet-to-be-released data from Custora’s E-Commerce Pulse Mobile Report. That is up from basically nothing a year ago, Custora says.
If the phone does catch on with consumers, it will be a good thing for all retailers who sell online, says Arish Ali, the CEO of mobile web site and app developer Skava. "If Amazon Fire 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," he says. "It will prove there is a desire for mobile shopping, which will ultimately be a boost for retailers everywhere."