Content Special Offers for new Kindle (KSO)

[tubemonkey]

This ad has been on my Kindle since last weekend. Yet, Amazon hasn't dropped a new Special Offer since 08 Jan. What's with that?

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You have to wonder how Amazon defines Special Offers. When this program began last April, Special Offers were offers exclusive to owners of Special Offer Kindles. Editors' Picks, Audible offers, monthly book deals, and AmazonLocal offers are not exclusive to KSO owners. Anyone can participate in these offers; even those who don't own Kindles.

It's now been 11 days since we've had a Special Offer. Has Amazon changed the rules and dropped the Special Offers in favor of ads only?

[ApK]

Originally Posted by tubemonkey

Has Amazon changed the rules and dropped the Special Offers in favor of ads only?

They are still advertising "special offers" on the product pages, so maybe it's just a sponsor dry spell.

[copyrite]

I was trying to be positive about this, but this is depressing.

[geoffwood]

Amazon gave you a discount on the device in exchange for advertising. They may call them "special offers" but they are advertisements. It's not a good business model to give people a discount upfront just in order to give them even more discounts as time goes buy.

I suspect they know what they are doing, have crunched the numbers and have found that Kindle Customers who accept "offers" aren't going on to make additional purchases so they aren't adding sufficient incremental revenue.

It's either that or people are responding just as well to "offers" that don't offer any discount, so again what is the incentive to offer the discount?

I took advantage of the $10 off $20 at soap.com a week or so ago, but I have no intention of buying there again and have unsubscribed from their emails. What value did they get?

[Blossom]

AdMash has 3 ads this week. One is for upcoming $2 off a classical crossover MP3 Album. The other two were just advertisements for Prime and Local Vitamins.

I think the Amazon may be having trouble getting sponsors for special offers.

[tubemonkey]

Originally Posted by geoffwood

Amazon gave you a discount on the device in exchange for advertising. They may call them "special offers" but they are advertisements. It's not a good business model to give people a discount upfront just in order to give them even more discounts as time goes buy.

Au contraire, they gave both a device discount and future exclusive discounts in exchange for displaying ads. But that was then and this is now. The Special Offers are slowing down. I suspect Amazon has reached a saturation point and we'll see fewer SO's as people no longer need to be enticed with additional incentives to buy these very low priced ad supported models.

[ApK]

Originally Posted by geoffwood

I took advantage of the $10 off $20 at soap.com a week or so ago, but I have no intention of buying there again and have unsubscribed from their emails. What value did they get?

Ummmm....they got at least $10 and some free publicity from you.

I think you are confusing "discount" with "loss."
The sponsor may be offering discounts , but they are not taking a loss.
The model is old and proven and works quite well, thanks.

[geoffwood]

Originally Posted by ApK

Ummmm....they got at least $10 and some free publicity from you.

I think you are confusing "discount" with "loss."
The sponsor may be offering discounts , but they are not taking a loss.
The model is old and proven and works quite well, thanks.

They did get $10, but I got $20 worth of merchandise, and it shipped for free. they might have broken even, but I doubt they made a profit.

Customer acquisition is expensive, but offering discounts doesn't attract the kind of customers you need, it attracts people that are price conscious and who chase discounts. Acquiring customers with great service and by word of mouth is much harder, but ultimately far more successful.

[ApK]

Originally Posted by geoffwood

They did get $10, but I got $20 worth of merchandise, and it shipped for free. they might have broken even, but I doubt they made a profit.

There are loss leaders, indeed, but unless you know their actual margins, I'll bet on them making a profit, just a smaller one.

offering discounts doesn't attract the kind of customers you need, it attracts people that are price conscious and who chase discounts. Acquiring customers with great service and by word of mouth is much harder, but ultimately far more successful.

There are far fewer people who DON'T shop for discounts than who do, and while the individuals who don't might spend more, the total market leans toward the discount shopper. That's why even the highest-tier brands have discount brands and are CONSTANTLY running sales.

Here's a recent NPR story on this very topic
http://www.npr.org/2011/12/16/143856...ll-of-the-hunt

[geoffwood]

Originally Posted by ApK

Here's a recent NPR story on this very topic
http://www.npr.org/2011/12/16/143856...ll-of-the-hunt

An interesting read and it certainly doesn't contradict my point. When you offer discounts you are engaging in a race to the bottom in terms of price. As that article says at the end, when you are buying the business of customers that aren't profitable, what's the point.

There are plenty of people who are willing to pay a premium for what they perceive to be premium products and service. There are lots of phones that are cheaper than the iPhone, but Apple has a great business model and they are playing for profit, not market share. They have about 15% of the smartphone market by volume but make about 66% of all the profits. Zappos is another company that I happily pay full list to because I know I will get great service.

Discounts are a fools game and undermines credibility. Take Kohl's as an example. Slap a price on a product that is double what you ever expect to sell it for, and then offer 50% off. In the mean time if someone is crazy enough to pay full price then more fool them.

[ApK]

Originally Posted by geoffwood

Discounts are a fools game and undermines credibility. Take Kohl's as an example. Slap a price on a product that is double what you ever expect to sell it for, and then offer 50% off. In the mean time if someone is crazy enough to pay full price then more fool them.

I'd argue that the only difference between Kohl's and Apple in that respect is Apple doesn't offer it at 50% off.

The upshot is, however, that discounts are the main way retailers survive now. The RISK of that race to the bottom is there, but the current reality is that the largest and mot profitable retail companies in the world are discounters. (Like, say, Amazon?)
I think the audio program in that article (if it's the one I recall listening to) spoke of high-end retailers (like Saks 5th Ave) relying on discounting brands (Off 5th) to be competitive.

[geoffwood]

Amazon works on the "Long Tail" model. They sell a boatload of a few products, New York Times bestsellers as an example, at significant discounts, but they make it up on the hundreds of thousands of products that they only sell a few of, but they sell each one at full price. They make their money on those long tail products, not the mainstream discounted products. If all you sell is mainstream products at a discount, then you are in trouble, like Best Buy, or as I heard them referred to recently "Amazon's showroom"

[DreamWriter]

Originally Posted by geoffwood

They did get $10, but I got $20 worth of merchandise, and it shipped for free. they might have broken even, but I doubt they made a profit.

The value of such offers to the business is that a percentage of first-time buyers will become regular customers, returning again and again. The offer did generate some goodwill and visibility for the company, which are important, and maybe repeat business in the future because trust has been established.

[tubemonkey]

Today is offer day

...and guess what Amazon doesn't have for us?

[geoffwood]

Originally Posted by tubemonkey

Today is offer day

...and guess what Amazon doesn't have for us?

Soup?