Amazon seeks to evolve its commerce business through its smartphone

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Amazon’s looking to boost its own m-Commerce business through its smartphone launch

In the previous part of this series, we discussed some of the attractive features of Amazon’s (AMZN) new smartphone named Fire. We also discussed how, by launching the high-end smartphone, Amazon has entered into the territory currently dominated by Apple (AAPL) and Samsung (SSNLF). Amazon’s main strategy behind launching its Fire smartphone could be not to take substantial market share away from Apple and Samsung, but to boost its own m-Commerce business.

US Retail mCommerce Market

The mobile commerce market shows strong growth

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According to eMarketer and as the chart above shows, the U.S. retail mobile commerce market will grow from $42 billion in 2013 to $58 billion in 2014 at a growth rate of 37%. The mobile commerce market will account for about 19% of overall e-Commerce sales in the U.S. in 2014. The report also predicts that this market will grow to $133 billion by 2018, accounting for nearly 27% of retail eCommerce sales and 2.4% of total retail sales in the U.S. Interestingly, the report also mentions that two-thirds of these mobile commerce transactions will come from tablets in 2014, which will increase further to 75% by 2018. Along with Amazon, eBay (EBAY), Apple, and Google (GOOGL) are big players in the mobile commerce market.

Evolving commerce service could be the main strategy behind Amazon’s smartphone launch

Even if Amazon isn’t able to sell many smartphones due to the stiff competition from Apple and Samsung, it will help the company provide data about people’s shopping habits from mobile, which Amazon can in turn use to improve its eCommerce service. The new Firefly feature that Amazon has developed will also make buying much easier. Firefly is an image recognition technology that can recognize images, text, and audio in order to identify bar codes, movies, and songs for purchase through Amazon’s website. Through Firefly, the user can put the recognized product in a queue, which they can then be buy immediately or later from the Amazon website.

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