Amazon's strategy of selling Kindle devices at cost is paying off for the retailer, at least according to one survey.
Consumer Intelligence Research Partners surveyed 300 Amazon.com customers in the three months leading up to November 15 of this year. The research firm found that Kindle Fire and Kindle e-reader owners spent an average of $1233 per year on Amazon. That's a fair chunk of change, especially when compared to the $790 per year people who don't own any Amazon devices are spending at online retail site.
CIRP also estimates that 20.5 million Kindle e-readers and tablets are currently in use in the United States, and that 40 percent of people who shop on Amazon own a Kindle device. Kindle owners tend to shop in more Amazon departments, and buy from Amazon 50 percent more often than non-Kindle owners.
"Another way to look at Kindle Fire and Kindle e-Reader is as a portal to Amazon.com," CIRP co-founder Mike Levin said in a statement. "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 itself is famously coy about Kindle sales, often boasting about record-breaking performance without providing any actual figures. It's no secret that Amazon doesn't profit from Kindle device sales, and that the company tries to make money by selling e-books, video, apps and other merchandise to Kindle owners. Still, Amazon avoids going into specifics about whether the strategy works.
CIRP's survey suggests that the profitless device model is working, though a disclaimer about correlation and causation applies: Just because a Kindle owner spends $443 more on average doesn't mean the Kindle itself is causing all that extra spending. Those who buy a Kindle already may be invested in Amazon's ecosystem, perhaps through Amazon Prime memberships or regular purchases of Kindle e-books, so they may be predisposed to getting a Kindle e-reader or tablet in the first place.
It's probably true that Amazon's devices invite some level of extra spending. But unless Amazon itself starts describing that spending in hard numbers, the full extent of Amazon's hardware success--or failure--will remain a mystery.