The rumours are floating around this week of Amazon’s interest in purchasing mobile ad network Jumptap, with speculation that it is to take on the likes of Apple and InMobi. At first glance this seems logical but if you know Amazon and Bezos you know that they aren’t about the following – that’s not what got them to where they are.
Here’s why it is so different: Amazon is a retail company. $55 billion worth of merchandise – digital, perishable and hard goods – left their doors and entered ours last year. They aren’t interested in helping other retailers sell stuff, they want to sell more of their own. They want to take what they know about their shoppers and make them shop more and make it more convenient. In essence, they would buy Jumptap to make it a private product.
Make commerce better (easier)
A good friend that runs an up and coming ecommerce platform shared the statement “Make. Commerce. Better.” I posit that what Amazon is doing is making commerce easier and there is a difference between “better” and “easier” – a huge difference. Better commerce is tactile, easier commerce is profitable. Better commerce is more product, easier commerce is one-touch payments. Better commerce is free shipping, easier commerce is free same day delivery. The point is that commerce still needs to be easier and more fulfilling than getting into your car and heading to the store – something that Amazon is striving to achieve.
Mobile as the commerce tool
If there is one thing a retailer understands it is the impact of a loyal customer. We know the cost of acquiring a new customer versus keeping an existing one and mobile has been quite effective at helping customers find alternatives. It is here that Amazon looks to embrace mobile to create a deeper loyalty with their existing customers.
Many companies have tried to gain more pocket share from customers – Canadian Tire sells tires and milk, Loblaws sells milk and clothes, and WalMart sells, well, everything. This is an obvious attempt at grabbing a dollar instead of earning business. I don’t know anyone who goes to Canadian Tire exclusively for groceries – they’ve become this generation’s convenience store. 7-11 version 2.0 if you will.
Amazon’s differentiation is in the data
Amazon’s superseding strength is in the data it has been collecting since it opened. They pioneered ecommerce inferred recommendations, 1-click check outs and highly targeted product placement based on passed purchases. And they made it effective. They brought smaller merchants into the fold, hosting their stores and handling the entire purchase process from payments to shipping, customer service and returns. They have started to succeed in perishable goods and speedy delivery – something Grocery.com couldn’t quite get right back in the dot com days – and now they are looking squarely at mobile.
Moving into tablets was a confluence of incredible timing with the beta test being the success of the iPad and pervasiveness of the Android operating system. The approach they took was to look at these windows as the future of the store front. They could sell them for cheap because they understood that long-term revenue would come as a result of ownership – people would buy more from them just like they did with the Kindle and books.
Now they are embarking on an aggressive approach to deepening their relationship with customers – keeping them purchasing from Amazon is the goal of any kind of ad network acquisition.
Commerce enabled – everywhere
Product discovery is only the start – something that few companies are doing right but every single one is trying. As the act of commerce moves from a fixed destination to a more fluid contextual experience, discovery takes a back seat to the actual transaction. Facilitating a seamless transaction while standing on a bus from a mobile device is easy commerce.
The disruption has already happened – and it isn’t display advertisements
Amazon wants to sell you whatever you need, whenever you need it. They are destroying the concept of MSRP, the store front and commerce as a destination. Retail as we know it has been forever changed by Amazon and their potential acquisition of an ad network is not to take part in the $3 billion a year mobile advertising industry, it is to use mobile to take more of a chunk out of the $4.7 trillion retail industry.