Photo: Scott Beale / Laughing Squid
Amazon is making a smartphone next year, according to Citi’s Mark Maheny and other sources.This seems totally crazy. Amazon doesn’t do anything significantly better than other smartphone vendors, and on a lot of levels (at least looking at the Kindle Fire), it’s worse.
But Amazon does have one thing that no other smartphone maker has: a huge store of information about customer buying habits.
For the last year or so, we’ve heard tons of speculation about how mobile commerce could work, with everybody from Google to a bunch of startups proposing their own spin on the idea. The basic idea is that customers would get deals or discounts based on their past buying habits and current location.
For instance, I buy espresso beans about every three weeks. If it’s coming up on that time and I’m in the neighbourhood, maybe the store pushes me a coupon offering me a 10% discount if I come in right now and buy.
The hard part about this scenario is getting customer data to make deals relevant. Google doesn’t really have it — it has search data, which is somewhat relevant, but it really has to collect buying habits via Google Wallet over time. The startups talking about this scenario don’t have it, but hope to collect it on the way.
Amazon has it. If you’re an Amazon customer, it knows what you buy, when you bought it, who you bought it for, and how often you return. It also has a bunch of other customer buying habits which it could use to predict what you might be interested in.
So imagine Amazon rolls out (with partners) an entire system — mobile phones with NFC chips built into them, kiosks or terminals that let you pay with your phone, and a sophisticated daily deals service (maybe based on Living Social, which it owns a big stake in) that actually knows what you what you might want to buy.
Businesses would love the promise of getting higher conversion rates — the deals are more relevant — and frictionless transactions.
Would consumers bite? Do they really want a phone that pushes them advertisements all the time?
Maybe if the phone was cheap enough. Like if Amazon and its partners gave it away in hopes of earning money back on the transactions later.
And maybe if Amazon marketed it as “the only phone that saves you money.”
Jeff Bezos is no bozo. This would be his way of leveraging Amazon’s huge online commerce business into the real world, where more than 95% of transactions still happen.
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