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[8 comments]

Amazon looks to pump up Kindle sales with monthly payments

March 14, 2014

Maybe Amazon's mindreading technology does work. While many of the recommendations that I'm used to getting from the e-tailing giant are less than precise, one showed up in my in-box this morning that might be worth exploring.

We've been talking about buying another tablet so the youngest member of the household won't have to borrow from the adults. We haven't pulled the trigger because we've been getting by without one and prices, even on entry-level tablets, are high. Today, however, in rides Amazon.com on a symbolic white horse with an e-mail offer to take a bit of the sting out of buying its Kindle Fire 7" Tablet — monthly payments starting at $27.80.

According to Amazon, customers who want to take advantage of the offer will be charged 20 percent of the device's price up front, plus applicable tax and shipping charges. The remaining 80 percent will be broken down into four monthly payments charged to their credit card. Amazon will not charge interest or finance charges and there are no hidden fees. Because the sale is being put on a credit card, there is no need to fill out an application or for a credit check to be conducted.

Amazon's Kindle e-mail follows yesterday's announcement from the company that its Prime members will begin paying $20 a year more for their annual subscriptions — currently at $79 — when they renew.

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Discussion Questions:

Will Amazon's installment plan help to drive sales of its Kindle tablets and e-readers? Do you see this plan as being better than comparable plans offered by Apple and other competitors?

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Instant Poll:

How effective will Amazon's installment payment plan be in helping to drive sales of its Kindle tablets and e-readers?

Comments:

This is a no-brainer for Amazon. They already have your credit card number and your purchase history, so why not offer a Kindle with convenient monthly payments?  This is something that Google and Apple would be hard pressed to do. It gets Kindles into more hands, which sells more books, movies and TV shows. Good move Amazon.

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Max Goldberg, President, Max Goldberg & Associates

A simple and effective way for Amazon to move up the ownership of the Kindle Fire. Based on the January, 2014 Prosper Insights & Analytics Media Behavior & Influence (MBI)Study of 15,410 Adults, 12.9% of the population currently has a Kindle Fire tablet. That compares to 23.4% of Adults with an Apple iPad, and 12.4% of Adults having an Android device -- largely the rapidly growing Samsung tablet. Nook (4.1%) and Windows (2.7%) lag behind.

The Kindle tablet's core customer base is more likely to live in households earning less than $50,000, or they are in a household that is seeking a second device for a younger household member -- George's family.

The objective here is to get device owners to make greater use of their devices -- not to merely sell the tablet. The MBI points out that 59.0% of Kindle Fire owners Regularly/Occasionally search the internet on their Fire tablet. In comparison, 91.9% of iPad device owners Regularly / Occasionally search and 88.2% of Android tablet owners Regularly / Occasionally search the internet via their devices.

Amazon has to put more of their devices in the hands of consumers if they are to be the competitive player on the search side. Bringing in younger users should pay off for them in a long term play, as those Gen Y users make use of the tablet.

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Roger Saunders, Managing Director, Prosper Business Development

Now you can own your very own Kindle in 4 easy installments - if it works for the Ginsu why not for the Kindle. I think this is a good move to help penetrate down market and alleviate some of the upfront cost for the consumer.

They have the payment mechanism as well so they can do it without interest or fees.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

If they can get the Kindle in consumers hands before they opt into another platform I have to believe it will help long term. The big win is to get those users to buy Prime. Once they get hooked on free shipping and entertainment content it will be hard to switch them to another platform. I love my Prime service.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

Flexible payment with no interest is a very nice incentive. Once connected to all of the Amazon content users are sure to be positively influenced. We have an ipad, Galaxy, and Kindle Fire floating around the house and the best device to read books on is the Fire. Getting the reader into the hands of consumers should be job 1 for Amazon. I'm surprised they are not willing to lose more money on the devices in order to build their base.

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Larry Negrich, Vice President, Marketing, nGage Labs

I'm not overly excited: there are certainly a great many still untapped higher end households (who can afford one without the inducement of "EZ Credit"...we're not talking about a house or even a car here, after all) so this suggests to me more an issue of limited demand. And of course, Amazon has never had a problem getting people to buy things: it has a problem consistently making a profit from their doing so.

'notcom'

Great variation on "give the razor, sell them the blades" strategy. Getting the Kindle (hardware) in the hands of customers with an easy payment plan will certainly lead to selling more books, games, etc. (software). I would be surprised if B&N didn't try to quickly follow suit.

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Steve Montgomery, President, b2b Solutions, LLC

The idea of time payment for technology is not new. Dell computer has been offering this option for years. A few holiday seasons ago we saw Kmart bring back the layaway program. I think this is just a reality of the changes in spending as a result of the recession. Big outlays get delayed, but smaller ones are placed. I think this will sell the second or third Kindle into a Kindle household, but may not bring in new households.

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W. Frank Dell II, CMC, President, Dellmart & Company

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