Retailers Mixed on Impact of Amazon Fire Phone

Jun 26, 2014 2:00 PM  By

Retailers and retail experts contacted by Multichannel Merchant were mixed in terms of how the new Amazon Fire phone – with its ability to directly link scanned products to items for sale on Amazon.com – would impact their businesses and retail in general.

But they were unanimous in viewing the new phone as being yet another tool that Amazon will use to secure its leadership position in ecommerce.

In that vein, most also said the Fire phone primarily was a way for Amazon to drive more subscriptions to its Prime service, and gaining share in the hypercompetitive smartphone market was a secondary consideration.

“They just keep laying out tracks so all roads lead to Amazon,” said Ian Ginsberg, president of apothecary retailer C.O. Bigelow.

Probably the most significant and talked-about feature of the Fire phone is the Firefly app, which lets users point it at any product, barcode or QR code and have the item displayed on Amazon.com for purchase. A similar app called Flow has already been available on the Fire tablet and on Android and iOs devices. By virtue of its four cameras, the Fire phone can also display objects in virtual 3D; they can also be viewed from different perspectives by tilting the phone.

Ian MacDonald, ecommerce manager for Silver Star Brands, said the release of the Fire phone is yet another indication that the days of retailers avoiding Amazon are over.

“For me, it’s a mindset thing,” MacDonald said. “We’re beyond the point in retail where you can ignore Amazon or say it has no impact. You need an Amazon strategy; you need to find a way to partner with them.” He added the addition of Fire to the Amazon arsenal was a “net positive” for retailers.

MacDonald said he understood concerns from retailers about Amazon practices like finding out what their top sellers were, and putting them on the Amazon marketplace at discounted rates.

“Maybe they do, but you’re still making a profit,” he said. “And yes, the Fire phone is making it easier for consumers to showroom. But showrooming is a fact of life that retailers can’t stop. What they really need is a strategy to help them succeed in this environment.”

Kevin Gardiner, director of operations and strategies for Macy’s, said he believed the Fire would mostly appeal to consumers that are already Amazon-heavy shoppers, so it would not create a lot of new share for the marketplace. “I think the impact for Amazon and other retailers will be fairly neutral, but clearly Jeff Bezos is calculating this is a major positive,” Gardiner added.

Scott Cohn, vice president of ecommerce for apparel company Chinese Laundry, said the direct link to the Amazon marketplace via Firefly put a crimp in mobile commerce competition – unless your products are listed there.

“If someone is searching on Google from their smartphone, brands have a chance of getting discovered if they’re doing things like SEO, paid search and product listing ads right,” Cohn said. “But the Firefly app I think inhibits that competition. It makes it that much more important to be part of their channel.”

Cohn said Amazon’s moves are forcing retailers to differentiate by providing value-added services like exclusive offers, broader assortments and enhanced loyalty programs – both in-store and online.

“You have to provide benefits that Amazon isn’t, like curating your offerings so customers don’t have to go through everything under the sun to find what they want, or by giving fashion direction like how to wear an item,” he said.

Scot Wingo, CEO and founder of ecommerce services provider ChannelAdvisor, said it would be interesting to see what impact the 3D view and tilt/swivel features of the Amazon Fire will have on retailers.

“Someone could be looking at a dress online and suddenly they can start to rotate it around to get a better view,” Wingo said. “It could have really interesting implications around imaging and how products are presented.”

Wingo said ChannelAdvisor estimates there are 25 million members of Amazon Prime. With Amazon offering a free year of Prime membership with the Fire phone at a $100 value, he could see it adding up to 5 million new subscribers.

“That could have a material impact (on Amazon and Prime membership),” Wingo said. “It’s another way for them to lock in the Internet’s top buyers.”

Ginsberg said the Firefly app, and Flow which preceded it, “changed the game” in terms of anytime, anywhere ecommerce, especially with the growing ubiquity and all-day use of smartphones.

“Say someone is home and runs out of spice,” Ginsberg said. “They can just scan the bottle, and if they’re an Amazon Prime member they can get anything via next-day air for free. This has upped the game in terms of driving orders through Amazon.”