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Amazon Fire: M-Commerce Assumes a New Form Factor

BY Dan Berthiaume

I don’t mean for this column to become a running commentary on the latest goings-on at Amazon.com, but there’s no escaping the fact that after two decades, the e-commerce pioneer remains at the forefront of digital commerce innovation. One area where Amazon has particularly excelled is at creating new form factors for consuming its content and buying its goods, and the recent release of the Amazon Fire smartphone is the latest example.

Oh sure, Amazon Fire offers leading-edge display and sound features that should make it a competitor in the smartphone market regardless of its serviceability as a mobile commerce tool. However, Amazon is not releasing Fire to become the next Apple or Samsung. Much like the Kindle tablet, the Fire smartphone’s true purpose is to ease access to the Amazon digital marketplace from as many customer touch-points as possible.

Here are three key Amazon Fire features that specifically serve as mobile extensions of the Amazon.com e-commerce site.

Firefly

Most significantly, a feature known as Firefly can recognize 100 million items, including physical objects such as CDs and books, as well as barcodes and QR codes, and even the sound of a song through the phone’s built-in microphone. Firefly can also recognize digital content such as TV shows and movies.

Conveniently, the phone includes a dedicated Firefly button that lets users instantly create shopping lists of goods and content identified by Firefly, as well as make instant purchases via Amazon.com. In addition, Firefly can perform helpful services such as pulling up a Wikipedia entry on an image of a piece of art and recognizing phone numbers and street signs.

But clearly, Firefly is designed to turn both the physical and digital environment of the Amazon Fire user into an extension of the Amazon marketplace. This is a brilliant move on Amazon’s part, and builds dramatically on the promise of its recently released Amazon Dash mobile ordering device. The impact Firefly will have on other retailers remains to be seen (bold prediction: it won’t be favorable to Amazon’s competitors).

Prime Integration

Amazon Fire fully supports all Amazon Prime offerings such as Prime Music and Prime Video, as well as the Kindle Newsstand app for buying electronic publications. This is more of a predictable move and far less disruptive than Firefly, but nonetheless another sign that Amazon is seeking to “Amazonify” the m-commerce space as much as it can. Amazon Prime has about 20 million members who make a nice initial user base to target and may help speed up the spread of Amazon Fire in the smartphone market.

3-D Interface

One of Amazon Fire’s many “cool” features is a 3-D interface with a head-tracking system that uses four cameras with a rolling shutter to provide a continually changing 3-D view as the user tilts the phone in different directions. This feature has broad appeal beyond mobile shoppers, but it’s no accident that during the Amazon Fire public launch event, Amazon founder Jeff Bezos demonstrated an app that allowed the user to sort through dresses as if they were in an actual 3-D space.

The more real a customer experience Amazon Fire can deliver, the more utility it will have as a mobile commerce tool. Unlike most other mobile commerce tools, Amazon Fire steers consumers to one particular destination.


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J.C. Penney announces closing of new $2.35 billion credit facility

BY Marianne Wilson

Plano, Texas — J. C. Penney Company announced today that it has closed its new $2.35 billion asset-based senior secured credit facility, comprised of a $1.850 billion revolving line of credit and a $500 million term loan.

The new facility, which replaces a $1.850 billion credit facility that was scheduled to mature in April 2016, provides better pricing terms and increased liquidity than the previous facility, the company said. Proceeds from the term loan will be used to pay down the cash borrowings on the previous facility. The revolving line of credit will be available for working capital and general corporate purposes.

“We proactively pursued this new facility to extend the maturity several years and further enhance our liquidity position, particularly during periods of peak working capital needs,” said Ed Record, CFO, J.C. Penney. “We are pleased with the improved pricing terms of this facility, as well as the support and confidence from our banking partners."

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Small formats in future for Walmart Canada

BY CSA STAFF

Former Delhaize CEO Dirk Van den Berghe was named president and CEO of Walmart Canada as the retailer eyes long-term growth opportunities including the development of small stores.

Walmart Canada hasn’t formally announced plans to open small format stores, but the choice of Van den Berghe to fill the position recently vacated by Shelley Broader is the latest evidence that small format stores are in the works. Van den Berghe spent the past 12 years with Belgium-based Delhaize and most recently served for three years as the company’s CEO for Belgium and Luxemburg operations. In that capacity, he oversaw the development and growth of Delhaize’s traditional supermarkets as well as small formats operating under the Proxy and Shop & Go banners.

In his new role at Walmart Canada, Van den Berghe will report to Broader who was elevated to the role of president and CEO of Wamart EMEA within the retailer’s international division. He joins the retailer’s Canadian operation as it prepares for it next leg of growth as a robust supercenter expansion strategy driven by the conversion and relocation of existing discount stores runs out of steam.

This year, will see the retailer open 35 supercenters, giving it a projected year end total of 395 stores, of which 282 will be supercenters and 113 will be discount stores. Just 18 months ago, Walmart Canada had 379 stores, of which only 209 were supercenters and 170 were discount stores.

With the number of discount stores suitable for conversion dwindling, Walmart is again poised to follow the pattern of growth unfolding in the U.S. where the emphasis increasingly has shifted to smaller stores operating under the banners of Neighborhood Market, Walmart Express and Walmart To Go.

The hiring of Van den Berghe supports the thesis that Canada soon will see the development of alternative formats. During his tenure a CEO of Delhaize Belgium and Luxembourg, he oversaw an operation consisting of 852 stores that generated annual sales of more than $6.7 billion, roughly one fourth the company’s 2013 total global sales of $28 billion. However, none of those stores looked anything like the units Walmart operates in Canada which are massive by comparison. Even the company’s traditional Delhaize supermarkets average only about 20,000-sq.-ft., roughly half the size of a typical Walmart Neighborhood Market which is regarded as a small format in the U.S. The Proxy and Shop & go stores Delhaize operates in Belgium and Luxembourg average about 5,000-sq.-ft. and 1,500-sq.-ft., respectively.

Store sizes in general tend to be smaller in Europe due to population densities and the regulatory climate. This was especially true for Van den Berghe in Belgium and Luxembourg, a geographic region about half the size of West Virginia with a population about one third that of Canada’s roughly 35 million people.

“Under Dirk’s leadership, Delhaize has been successful in several countries, and his vast experience will allow us to strengthen our growing food business in Canada and complements our highly-successful general merchandise operation,” Broader said. “One of Walmart’s greatest strengths is having exceptional leaders to drive our continued growth, and Dirk is a prime example of this talent.”

In addition to his retail background, Van den Berghe brings some non-traditional skills to Walmart Canada. He spent a decade with the Belgium government as an international trade commissioner and also has two decades of experience teaching international business at universities across Europe, Asia and the United States. He earned a Ph.D in economics from Sofia University in Bulgaria and speaks seven languages including English, French and Dutch.

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