How Amazon Makes Money or Duh

[ProfCrash]

https://socialreader.com/?chid=70644.../content/44NxI

These days, you can buy a new Kindle e-reader from Amazon for $49.

Meanwhile, Amazon's Kindle Fire HDX with an 8.9 inch screen costs $379 – much cheaper than a comparable $499 iPad from Apple.

How and why does Amazon charge so little for its gadgets?

Both questions are answered with one single stat.

During a single year, Kindle owners spend, on average, $443 more buying stuff from Amazon than the average Amazon shopper who does not own a Kindle.

Consumer Intelligence Research Partners derived that stat from a survey survey of 300 subjects who made a purchase at Amazon.com in the three-month period ending November 15, 2013.

CIRP estimates that Amazon Kindle device owners spend approximately $1,233 per year buy stuff from Amazon, compared to $790 per year for other customers.

“Another way to look at Kindle Fire and Kindle e-Reader is as a portal to Amazon.com,” said Mike Levin of CIRP, in a press release put out to announce the study results (.PDF).

“Kindle Fire provides access to everything Amazon sells, while Kindle e-Reader has become the way that Amazon customers buy books, Amazon’s original product line.”

Amazon sells Kindles cheap – perhaps at a loss – because it knows getting a device into a customers hands means that customer will spend an extra $4,500 at Amazon over the next 10 years.

I am sooo surprised. Yup. I am. This is my surprised typing tone. Very, very surprised. And my surprised face. Yup. I had no idea that is how Amazon worked.

[DrNefario]

Yes, I've always thought that Amazon sell hardware to support their content sales, while Apple sell content to support their hardware sales. I don't think I'll bother with that link.

[tubemonkey]

Color me shocked, too

[copyrite]

Amazon sells Kindles cheap – perhaps at a loss

That ain't no loss if you have that much of a profit!

signed,
copyrite,
Amazon lemming extraordinaire

[HarryT]

Given that Mr Bezos has stated on a number of occasions that Amazon sell Kindles at cost price, I entirely fail to see why this is news to anyone.

[ucfgrad93]

Originally Posted by HarryT

Given that Mr Bezos has stated on a number of occasions that Amazon sell Kindles at cost price, I entirely fail to see why this is news to anyone.

Agreed. Mr. Bezos has been very upfront about it.

[tubemonkey]

Plus he wants you to buy new Fires every year.

[ProfCrash]

Originally Posted by HarryT

Given that Mr Bezos has stated on a number of occasions that Amazon sell Kindles at cost price, I entirely fail to see why this is news to anyone.

Tell me about it. The difference in spending is interesting. I will acknowledge that my spending at Amazon has increased but that is because of subscribe and save and the ability to save 20% on diapers, baby wipes, and the like. So we get a monthly delivery of the commonly used stuff and save money. It is a win win.

And my spending on books has increased. Mainly because I have my Mom and MIL on my account and we pick up their books. They are both retired and read a ton. (shrugs)

Then again, one of the reasons that people end up buying a Kindle is because of the book store. I would imagine that the same is true for people buying Fire's.

[fjtorres]

Methinks they might have causality reversed; it could simply be that Amazon's most active customers are more likely to buy Kindles. Makes it a chicken-n-egg conundrum.

(Although, of course, we all know the egg came first.)

[Lemurion]

Color me surprised... not.

Amazon provides excellent customer service and provides Kindle devices inexpensively so that people will be more likely to spend money there... in other words because it's good business.

[xg4bx]

Originally Posted by fjtorres

Methinks they might have causality reversed; it could simply be that Amazon's most active customers are more likely to buy Kindles. Makes it a chicken-n-egg conundrum.

(Although, of course, we all know the egg came first.)

I chose/bought a Kindle based on my positive track record with Amazon.

[tubemonkey]

Kindle = bigger selection, better CS, and wireless transfer of library books.

[Shane R]

I will jump in with both feet when the Paperwhite price drops.

[pidgeon92]

Originally Posted by fjtorres

Methinks they might have causality reversed; it could simply be that Amazon's most active customers are more likely to buy Kindles.

Exactly. I was an Amazon customer for a decade before the Kindle was released.

[Barty]

I'm not buying any more kindle unless they start selling at a loss!! Your hear me, Bezos?