Amazon’s Prime Now is going mobile and beyond
Amazon wants everyone to be a Prime member and the e-tailing giant is taking steps with its Prime Now on-demand delivery program to bring the remaining holdouts on board. Beginning in May, according to reports, Amazon plans to expand Prime Now beyond a mobile app to make it available on desktop computers. The company also plans to sell advertising to brands, promising to provide them with greater exposure, while helping to offset its own costs in the process.
Prime Now is currently available to individuals who have downloaded the mobile app and have paid the $99 annual fee to be a member of Amazon Prime. The Prime Now program offers free delivery of goods within a two-hour window. Those wanting their orders within an hour’s time pay a $7.99 delivery fee.
One of the more interesting aspects of Amazon’s plans to expand the reach of Prime Now, first reported by Bloomberg, is its strategy to sell brands ad space to support the move to the main website.
Advertisers would pay $500,000 for Amazon’s “Launch Hero Package” which includes ads on the e-tail website along with promotions in company e-mails for about two weeks. Bloomberg’s reporting cited documents that placed the standalone value of the e-mail promotions at $100,000.
What’s not clear from reports is whether the ad fees paid by manufacturers will be part of traditional brand advertising budgets or sales promotion. If the latter is the case, the cost of goods to Amazon will surely go up as it does with all other retailers that seek upfront fees from brands rather than negotiating on a net price basis.
Discussion Questions
DISCUSSION QUESTIONS:
Will expanding Prime Now to Amazon’s main site from the mobile app help recruit large numbers of new members to Amazon Prime? What is your reaction to Amazon’s “Launch Hero” advertising offer?
Poll
BrainTrust
Max Goldberg
President, Max Goldberg & Associates
Keith Anderson
Founder, Decarbonizing Commerce
The whole is greater than the sum of the parts, especially for Amazon.
In my recent post: “5 Dirty Little Secrets for Amazon’s World Domination Strategy,” I reviewed how Amazon has a highly-connected, interwoven strategy. Prime and Prime Now are cornerstones of that strategy.
In true Amazon fashion, Prime is the keystone of customer-centricity that both generates and binds the most profitable customer relationships.
Make no mistake about it … Amazon is not a retailer or distributor. Amazon is the ultimate disruptor designing integrated capabilities beyond the reach of most any competitor. $500,000 for “Launch Hero” is just the tip of the iceberg of what it will take in the future to play within the Amazon machine.
The Amazon juggernaut moves forward. Who doesn’t want free two-hour delivery? By making it easier than ever to consider Amazon first, the company continues to roll up sales. Manufacturers who want to be first in line for consideration by consumers will pay Amazon for the privilege. Amazon wins on both sides of the transaction.
Prime Now’s move to the web may drive Prime memberships, but I think the bigger impact will be to drive Prime Now trial and adoption.
By eliminating the requirement to download and use another app, Amazon is helping Prime Now graduate from an under-the-radar service for enthusiasts to something much more visible.
It’s important to note that they’re doing something similar with Fresh, migrating it from a subdomain to Amazon.com.
Both moves are a sign of Amazon’s commitment to CPG.
Anytime you can provide more ways to access a product or service, there should be incremental usage. The desktop option addresses some of the small screen limitations of mobile apps. For a company like Amazon, which provides a variety of pictures, text, ratings, etc., the bigger screen should pay dividends.
The “Launch Hero” advertising offer makes sense for Amazon as well as the advertised brands. As noted, the advertising fees will contribute to Amazon’s ongoing development of new technology to better serve its customers. For advertisers this offer gives participating brands access to the millions of Amazon customers. Charging for such advertising is analogous to fees imposed by bricks-and-mortar retailers for more visible in-store shelf space.
Amazon continues think about retailing in a very different way than their competitors. However, they are catching on to the notion of brands and manufacturers subsidizing their growth, services and even technology.
Time will tell if the Launch Hero package is worth a half a million dollars to advertisers. While its advertisers’ CFOs will be doing the math on ROI calculations, siphoning off these kinds of dollars will certainly affect other advertising budgets and those more traditional retailers that benefit from them.
It is a fun time to be at Amazon, as The Street still loves you and provides the requisite cash to invest heavily in vertical integration. Amazon’s expansion decisions are much like my goal to live forever … so far so good.
I think expanding Prime Now to Amazon’s main site is a natural next step. Why make shoppers take the extra step of downloading their app? Making the path to purchase and loyalty as easy as possible is invaluable.
The advertisers that will participate in “Launch Hero” understand the reach and loyalty Amazon has and will be capable of in the future. While it costs quite a bit, the potential for lifetime loyalty is worth much more than that.