Developers See a 50% Increase in Revenue With the Introduction of Amazon Coins
E-commerce giant Amazon recently released its own digital currency called Amazon Coins. The new currency is mainly for Kindle Fire owners, and it can be used to pay for apps and games in the Amazon App Store for Android.
Why Amazon Wanted Its Own Digital Currency
A lot of customers don’t like to transform money into a virtual currency, just like Facebook Credits or Microsoft Points. But in Amazon’s case, the currency is actually targeted towards app and game developers. It’s a way for Amazon to promote the Kindle Fire to developers. It has been said that while it’s harder to make money on Android apps than iOS apps, Amazon is trying to change this by promoting the Kindle Fire. In a press release, Amazon stated that app developers get higher exchange rates on Amazon as opposed to other platforms. By encouraging these developers to actually back up Amazon Coins, they’re encouraging them to be more dedicated to Amazon. Of course, developers still keep 70% of their cut when they sell something via the Amazon Store.
In addition to app developers, Amazon’s Kindle Fire users are also going to benefit from this virtual currency. Amazon Coins will just be an option, but it’s a way for customers to get rewarded, unlike in a normal gift card or digital currency. With Amazon Coins, some app developers may choose to give out free coins by promoting the app through a Facebook post or a Tweet. Also, the bulk options of buying the coins can help users save money. By buying in bulk, users get more coins for their dollar, which means that they can buy more apps by using coins, as opposed to buying an app straight out with a credit card.
Jumpstarting the Amazon Economy With Free Amazon Coins
In May 2013, Amazon gave all Kindle Fire users $5 in Amazon Coins. As stated above, the coins can be used for apps and games, as well as for in-app purchases. Currently, since 100 Amazon Coins are at around $1, Amazon technically gave 500 coins to all its Kindle Fire users in the US.
This move proved to be a very good way to kickstart the Amazon economy. It caused customers to spend hundreds of millions of Amazon Coins, which actually represents real money to developers. App developers have reported that their weekly revenue spiked up by more than 50%. In addition, some developers said that more than half of their sales for that week used coins over cash, which gives them a ratio of 2:1, and their revenues rapidly grew after the coins went live.
Encouraging Kindle Fire Users to Spend More With Amazon Coins
Amazon, through these coins, is actually trying to push the spending power of Kindle users to its limit. Apple or Google doesn’t have this kind of virtual currency, which makes Amazon different from its two largest competitors. Amazon Coins make consumers feel like they are getting more than what they actually pay for. Currently, users are able to buy bulk Amazon Coins. The biggest bulk now is 10,000 Amazon Coins, for $90. That is definitely a lot, especially when one Amazon Coin is valued at around $.01.
By allowing users to buy their credits in advanced, Amazon is actually conditioning their minds that they are getting more for their money. A typical $90 straight purchase will only give you, for example, 9 apps worth $10 each, or perhaps 90 apps worth $0.99 each. With the Amazon Coin, you get 10 apps worth $10 each for 1000 Amazon Coins, and 101 apps worth $0.99 each for 99 Amazon Coins.
Offering Amazon Coins in bulk makes them think about the fact that they are spending $90 for a one-time purchase, and forget about spending for apps and games in the long term. It gives them a sense of saving money and actually controlling their purchases, but at the same time, it encourages them to buy more. After all, Amazon Coins do not expire.
Amazon Coins Help Build Strong Customer Loyalty
Amazon coins are essentially pre-paid cards. Customers can buy apps or games without needing to check out or enter credit card details. It makes the purchase faster, and with much less hassle, than the traditional checkout. This helps out the consumers who hate spending a lot of time just buying an app, or inputting his or her payment details again and again. By enabling a virtual currency, users can focus more on what they are doing rather than figuring out how to get this app or complete this in-app purchase.
Aside from that, the coins can be viewed as a promotional venue for Kindle Fire users to have a sense of exclusivity. It is to reinforce the Amazon brand, and somewhat build an “inner circle” of Kindle Fire users who use Amazon Coins.
As mentioned above, it is also a reward tool for both Amazon and app developers to use to reach out to their potential market. In the long run, app developers may reach out to their market by providing incentives through Amazon Coins. Amazon may also use it to reward its users by giving out free Amazon Coins for a milestone or achievement that a user might have done.
The Bottom Line – Are Amazon Coins Good or Bad?
Amazon has a lot of good plans with the Amazon Coins. Currently, users cannot use the coins to buy books, movies or videos from Amazon, but then again, the currency is still in its infancy. Amazon is planning to add more ways to earn and actually acquire coins through more content and activities.
But can Amazon succeed where other virtual currencies have failed? This is something that many people have asked. Where others have failed, Amazon is set to conquer and succeed. As one of the leading e-commerce websites, it may just have the capacity and credibility to actually push the coins better than its competitors who have attempted already attempted to develop their own virtual currency. Only time will tell what the result will be for Amazon Coins, but the new currency is off to a great start.