Earlier this week we held a session where Simon Morris, Marketing Director of our portfolio company Lovefilm shared experiences and brainstormed some ideas with a company in which we are thinking of making an investment. One of the things he shared is that he has always built the marketing at Lovefilm around three pillars – range, convenience and value, as these are the main benefits that customers get from the service.
As a customer of Lovefilm it is the convenience which I love. We don’t watch that many films in our house so the range isn’t important and if we were to do the calculation of cost per DVD watched I don’t expect it would look like great value – but the convenience is great. There is always a good film waiting for us when we do want to watch one, the postal returns are zero hassle and the Lovefilm site is a great place to store the list of films we want to watch (a list we always talked about keeping before we became Lovefilm customers, but never got round to starting).
I was reminded of Simon’s convenience point again this morning when I read that Amazon’s mobile sales are over $1bn for the last twelve months – my rough estimate is that puts mobile at 5-10% of total sales. There are two main constituents to Amazon’s mobile business – book sales on the Kindle and sales via smartphones, and I would posit both of these are doing well precisely because they are so convenient.
When I first got the Amazon app on my iPhone I tweeted with excitement about how quick and easy it was to buy stuff. That was probably 6-9 months ago and I still got a buzz when I used my iPhone to buy Cormac McCarthy’s The Road at a party last Saturday night two minutes after it had been recommended to me.
Similarly the Kindle makes it easy to buy books and whilst Amazon are coy about precise numbers the device is clearly doing well. One thing they are saying is that in the US over the last three months they are selling c1.5 Kindle books for every hard cover book they sell (analysis includes hard cover books which aren’t available on the Kindle and excludes free Kindle books).
It is the here and now of mobile which makes it so convenient. Being able to buy what you want immediately saves making a note to yourself or having some other system to remember what you want to do.