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Thursday, February 7, 2013

Online giants leverage new money schemes

A challenge faced by established online businesses is how to leverage their platforms and user bases to sustain or increase revenues. Social media pioneer Facebook and e-commerce retailer Amazon Inc. have hit on new schemes to monetize their services.

Facebook enters gift card fray

In late January 2013, Facebook launched a gift card scheme that employs physical cards that can hold balances for multiple retailers. The social media website said the Facebook Card service is being rolled out in select regions of the United States, the United Kingdom, Canada, France and Germany, with the cards currently available for use at a mix of retailers that includes grocery stores, convenience stores, discount retailers and a toy store chain.

Facebook said its users can purchase retailer-specific cards in the Gift Cards & Digital category on the website. Facebook Cards are then physically mailed to recipients, who are also Facebook users. The next time a Facebook user gives another gift card to that recipient, the gift amount is added to the Facebook Card already mailed to the recipient. Additionally, the cards can hold balances from different retailers.

"Facebook Cards are reusable," the company said in a Jan. 31, 2013, blog post. "After you've received a card, the next time you get a Facebook Card gift, it will instantly be added to your existing card. Your card can hold multiple gift balances, and each balance is dedicated to the retailer associated with the gift. For example, you might have gift balances of $100 at Sephora, $75 at Target, $50 at Olive Garden, and $8.25 at Jamba Juice."

Facebook users can view the balances on Facebook Cards via the social media site's account settings. Facebook will inform customers when balances on the cards change by sending text messages to mobile phones.

Coin of the Amazon realm

On Feb. 6, 2013, Amazon became a new entrant in the virtual currency movement. The online retail giant said Amazon Coins provides a way for Kindle Fire app and game developers to monetize their services and content. Following the model perfected by online role-play game developers, Amazon's virtual currency platform allows users of Amazon's popular tablet device to purchase Kindle Fire apps, games and in-app items with Amazon Coins.

Amazon said app and game developers that ply their wares in the Amazon Appstore will earn Amazon's standard 70 percent revenue share when customers make Appstore purchases using Amazon Coins. One Amazon Coin will be worth the equivalent of one cent in the Amazon ecosystem. Therefore, an app that costs $2.99 in the Appstore will cost 299 Amazon Coins.

"Developers continue to report higher conversion rates on Amazon compared to other platforms," said Paul Ryder, Vice President of Apps and Games for Amazon. "Now we have another new way to help developers reach even more of our millions of customers."

Amazon noted that customers will only be able to spend Amazon Coins on apps and games that are available for sale via the Kindle Fire. The virtual currency is expected to be launched in the U.S. market in May 2013. Amazon said it will give to consumers "tens of millions of dollars worth of free Amazon Coins" at the launch to spur usage of the virtual coins. Users will also be able to buy additional Amazon Coins via their online Amazon accounts. end of article

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